“Economic Consequences of the U.S. Convict Labor System,” 2018 [November 2018 Version] [Ziman Center Working Paper 2018-09] Coverage: [Economist], [EHS] Abstract: Prisoners employed in manufacturing constitute 4.2% of total U.S. manufacturing employment; they produce cheap goods, creating labor demand shock. I study the economic externalities of convict labor on local labor markets and firms. Using newly collected panel data on U.S. prisons and convict-labor camps from 1886 to 1940, I calculate each county's exposure to prisons. I exploit quasi-random variation in county's exposure to capacities of pre-convict-labor prisons as an instrument. I find that competition from cheap prison-made goods led to higher unemployment, lower labor-force participation, and reduced wages (particularly for women) in counties that housed competing manufacturing industries. The introduction of convict labor accounts for 0.5 percentage-point slower annual growth in manufacturing wages during 1880–1900. At the same time, affected industries had to innovate away from the competition and thus had higher patenting rates. I also document that technological change in affected industries was capital-biased.
Abstract: This paper investigates the role of national institutions on the persistence of cultural norms and traditions. In particular, I examine why the harmful tradition of female genital mutilation (FGM) persists in certain African countries while in others it has been eradicated. I argue that people are more willing to abandon their institutions and traditions if they are sure that the government is durable enough to set up long-term replacements for them. Conversely, people living under weak regimes revert to their traditional cultural norms. I exploit the fact that ethnic groups in Africa were artificially partitioned by national borders and, using a country-ethnicity panel dataset spanning 23 countries from 1970 to 2013, I show that one standard deviation in political regime durability explains 10 percent of the standard deviation of the share of circumcised women, conditional on the presence of an anti-FGM policy. The results are robust to an array of control variables and robustness checks. I confirm that the results are unlikely to be spurious by using within-nation variation in regime durability induced by leaders' deaths from natural causes.
Abstract: What role do elections play in nondemocracies? We propose an empirical test that can distinguish between two major families of theories on authoritarian elections: that elections can be used to maintain an image of invincibility of the regime (Influence Theory), and that elections can be used to get information about the popularity of the regime (Information Theory). While these theories might not be mutually exclusive, we show that they generate different predictions about the spatial allocation of electoral manipulations. Under the Influence Theory, electoral manipulations happen in areas where protest sentiments are high. Under the Information Theory, electoral manipulation should happen only in places where the potential for a successful protest is low. Using data from the 2011 parliamentary election in Russia and a regionally representative public opinion survey conducted before the election, we find that electoral manipulations were more likely to happen in regions where the level of protest potential is lower. When the protest potential goes up by 10 percentage points, the estimates of electoral manipulation in a subsequent election go down by a half of their standard deviation, thus corroborating the Information Theory.
“Nation-Building and Civil Conflict: Theory and Evidence from Tuareg Insurgency,” co-authored with Maxim Ananyev, 2018 [Under revision]
Abstract: We argue that state weakness undermines state legitimacy and empowers traditional sources of authority. Using the recent of Tuareg-led insurgency in Mali, we demonstrate that civil conflict erodes self-identification with a nation-state even among nonrebellious ethnic groups. We model the choice of loyalty (national or ethnic) as a coordination game with strategic complementarities (i.e., global game). This model allows us to show how the instances of political instability can break up that coordination and impede nation-building. To quantify the potential effect of political instability on national identity, we perform difference-in-differences estimation using Afrobarometer data from the Republic of Mali. Using the timing of the Tuareg-led insurgency in Mali caused by the demise of the Libyan leader Muammar al-Gaddafi, we find that the number of respondents living in an exposed region who self-identify with a nation decreases by about 26.7 percentage points. We also find that the adverse effect is greater on people who are more informed about local news.
“Do Private Prisons Affect Court Sentencing?”, co-authored with Christian Dippel [Under revision]
Abstract: This paper is the first to provide systematic evidence on the causal effect of private prisons on judges’ sentencing behavior. We link novel state-level panel data on the opening and closing of private (and public) prisons with state-circuit court data on sentencing. Our identification strategy relies on state-specific changes in private and public-prison capacity and compares changes in sentencing only across circuit court pairs that straddle state borders. We find that added private-prison capacity increases the length of sentences relative to what the crime’s fundamentals would predict. While the mechanism is likely some form of political influence, we can rule out two specific variants of this channel: one, changes in state-legislation cannot drive the results because we can absorb them with state-year fixed effects; two, we find no evidence that judges’ electoral cycles (harsher sentencing before judges run for re-election) become more pronounced with the presence of private prisons.
“U.S. Convict Labor System and Racial Discrimination,” 2018 [Available upon request]
Abstract: After the demise of the slavery and rise of crime after the end of the Civil War, convict labor system evolved in the United States in order to finance state penitentiary institutions. It provided monetary incentives to the police to arrest more people. Black and other minorities became an easy target for a police that used a variety of minor crime laws to increase the supply of coerced labor. Using the geographical variation of convict labor camps in the United States in 1886 I show that counties exposed to a more severe exploitation of convict labor experienced higher rates of incarceration among minorities in 1920, and 1930. Moreover, after the abolishment of the old convict labor system in 1941, the racial discrimination in policing remained: the same variation of convict labor camps predicts excessive arrests of Black and Hispanic for non-violent crimes (drugs and vagrancy). To show that the results are causal I use the exogenous shock of first massive expansion of the U.S. convict labor system in 1870 that had happened when the National Prison Association was founded in Cincinnati, Ohio. I use distance to Cincinnati as an instrument for the value of goods produced by convict labor. It correlates with the likelihood of attending the Congress by the wardens of prisons, and cost of getting information about the profitability of convict labor. I perform a series of sensitivity checks and placebo tests to ensure that results are indeed causal. I document that this reallocation of welfare from wage earners to capital owners had a long-lasting effect on equality of opportunities: intergenerational mobility of the bottom income quintile got worse, while it improved for the other quintiles.
“Convict Labor as a Determinant of Intergenerational Mobility in the United States,” 2018 [Available upon request] Abstract: Using historical distribution of the prison and convict labor camps in the United States, study the long-run effect of convict labor on equality of opportunities. Convict labor negatively affected wages of low-skilled workers and had positive effects on firms in affected industries. I document that this reallocation of welfare from wage earners to capital owners had a long-lasting effect on equality of opportunities: intergenerational mobility of the bottom income quintile got worse, while it improved for the other quintiles. Presentation Mode:
“Who Reaps Gains From Trade? Trade and Inequality in Diverse Societies: Evidence from Africa,” co-authored with Maxim Ananyev
Abstract: This paper investigates the determinants of income inequality between different ethnic groups in Sub-Saharan Africa. We make two contributions: first, we offer a Bayesian latent variable approach of estimating income inequality from survey data where the direct data on personal incomes are either lacking or unreliable. Secondly, we demonstrate statistically, that countries that export more manufacturing goods and natural resources have larger disparities in incomes between ethnic groups, but have no systematic differences in incomes within ethnic groups. Using panel data, we find that one standard deviation of reduction in an average tariff is associated with 0.43 standard deviation in the increase of between-ethnic inequality. In an attempt to investigate the mechanism of this statistical association, we use enterprise survey data to test if exporting firms face fewer regulatory restrictions (both formal and informal) and preferential tax treatment. Our study offers new evidence on the effect of international trade on income inequality in developing world.
Abstract: We exploit a natural experiment in the Chilean educational system to identify the causal effect of within-school exposure to ethnic diversity on students' attitudes, educational attainment, and earnings. We create unique and extremely detailed individual-level panel with information on various observables and socioeconomic outcomes for the universe of Chilean primary and high school students between 1992 and 2017. Using an event-study design, we show that diversity improves socioeconomic outcomes for children of ethnic groups, and has no negative impact on other children. We find positive effects of school diversity on university attainment, future wages, and preferences for redistribution.
“Estimating Socioeconomic Status from Survey Data Using Models of Hierarchical Consumption,” co-authored with Maxim Ananyev
Abstract: Estimating material well-being of households in developing countries is as difficult as it is important for many questions in economics and political science -- especially, for the theories of voting, redistribution, public opinion, “greed and grievance” in political action, and many others. This paper offers a simple two-step procedure for estimating consumption from survey data: on the first step, a researcher should estimate prices using an item-response model that we develop, and in the second step, calculate a weighted average of assets for every household using estimated prices as weights. We show with Monte Carlo simulations that this procedure yields relatively precise estimates. Our method opens a way to innovative use of survey data for answering many substantive questions.
Work in progress:
“Human Capital, Prison Work, and the Labor Market: Evidence from three Centuries of Prison Labor in the U.S.,” co-authored with Riccardo Marchingiglio
“Top Executives' Ancestral Characteristics and Firm Outcomes,” co-authored with Yuqing Zhou
“Roots of Intolerance: Impact of Religious Missions on Modern Anti-Gay Sentiments in Sub-Saharan Africa,” co-authored with Maxim Ananyev
“Political Economy of Private Prisons in the United States”
“Does Language Matter in Economic Behavior? Eliciting Language Effects from an Experiment with Bilinguals,” co-authored with Stefano Fiorin, Vasily Korovkin and Yuan Tian
“Abolishment of Harmful Practices: A Comparison of Foot-binding and Female Genital Mutilation,” co-authored with Lingwei Wu
Book Chapters and Policy Papers:
“Media in Russia: Between Modernization and Monopoly,” co-authored with Maria Lipman and Anna Kachkaeva, book chapter, pp. 159-190, in Daniel Treisman ed., “The New Autocracy: Information, Politics, and Policy in Putin's Russia”, Brookings Institution Press, Washington DC, 2018 [Link] [Book order link] Coverage: [Choice Reviews], [Washington Post]
Abstract: In this chapter, we explain the amazing efficiency of the “TV mobilization” of the past two or three years. We do not focus, however, on the linguistic, psychological or other effects of the government propaganda; we instead look into various aspects and mechanisms of the government media policy; its development over time; the broad range of methods the government has used to achieve control over the media operation. We examine concrete cases illustrating various stages, events and phenomena; we will cite journalists, editors and media organizers who have been (or were) part of this process. We provide rigorous analysis of the quantitative data illustrating the effect of media controls on shaping the public opinion. Finally, we look at how the Russian TV industry adjusts to the new, “network” audiences and the rapid progress of communications technologies.
“Developing Mechanisms to Enhance the Russian Development Innovation Institutions,” co-authored with J. Lerner, A. Leamon, C. Allen, V. Bosiljevac, S. Guriev, M. Gorban, A. Semenov, and A. Suvorov, 2012