While reading Joel Mokyr’s newest book I came across an older paper of him, which I found very interesting. It is about what Mokyr calls Cardwell’s law*— the empirical regularity that “most societies that have been technologically creative have been so for relatively short periods”. Throughout economic history successful countries in terms of innovation and economic growth have usually lost their competitive edge pretty soon again and were overtaken by others. Continue reading Cardwell’s Law
How does a shock to sex ratios affect marriage markets and fertility? I use the drastic change in sex ratios caused by World War II to identify the effects of unbalanced sex ratios on Russian women. Using unique archival data, the results indicate that male scarcity led to lower rates of marriage and fertility, higher nonmarital births, and reduced bargaining power within marriage for women most affected by war deaths. The impact of sex ratio imbalance on marriage and family persisted for years after the war’s end and was likely magnified by policies that promoted nonmarital births and discouraged divorce.
Other countries had similar wartime experiences to those of Russia. But what is unique about the Soviet context is the scale of casualties during WWII. There was an estimated number of “26 to 27 million, or roughly 13.5% of the prewar population”, victims. “The sex ratio fell dramatically for individuals born in the 1920s and reached a low of 0.60 for women born in 1924″. And this “relative scarcity of men continued to profoundly affect women’s lives: women were less likely to marry, more likely to give birth out of wedlock, and more likely to be divorced in the birth cohorts and regions facing the greatest shortages of men” (all quotes from the paper).
As the abstract states, the effect of male shortage was likely enhanced by subsequent Soviet family policies (p. 3):
Alarmed at the devastating population losses suffered by the country and the declining birth rate, the Soviet government implemented the strongly pronatalist Family Code in 1944. This legislation imposed a tax on single people and married couples with fewer than three children and expanded the child benefit program to provide a monthly payment for all children born out of wedlock (Heer, 1977). Far from discouraging nonmarital births, the 1944 law absolved fathers of any financial or legal responsibility for children fathered outside marriage; unmarried mothers were prohibited from naming the father on the birth certificate or claiming financial support for their children. The 1944 Family Code also made the procedure for divorce so expensive and complicated that it has been described as effectively a ‘‘prohibition on divorce’’ (Avdeev & Monnier, 2000). The high cost of divorce combined with nearly costless nonmarital sexual relations significantly increased the cost of registered marriage relative to bachelorhood for men.
The author concludes that, although the Soviet experience was certainly unique, the results on the effect of an extremely unbalanced sex ratio on marriage and fertility are informative also for other contexts. Similar things (albeit to a lesser extent) could have been going on in other post-war societies in Europe. And there is some empirical evidence to support this hypothesis (see here and here).
Some time ago I wrote about a paper of mine (Hünermund et al., 2015) in which my coauthors and me develop a model to explain the occurrence of industry shakeouts. Shakeouts are a phenomenon which we encounter frequently in new industries. At one point in time, a large number of relatively small firms, previously operating in a market, becomes unsustainable. Within a short period of time a lot of firms exit and, eventually, the industry becomes dominated by a few large players. Our model explains this frequently observed pattern by technological factors that change over the lifespan of an industry. Cost advantages — because of more efficient production technologies — allow a few firm to take over and squeeze all others out of the market. Continue reading Economic History: Antibiotics