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Essays on the Political Economy of Development

  • Mitrunen, Matti
Publication Date
Jan 01, 2019
DiVA - Academic Archive On-line
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Structural Change and Intergenerational Mobility: Evidence from the Finnish War Reparations This paper presents evidence that government industrial policy can promote new industries, move labor out of agriculture into manufacturing, and have long-term effects via increased human capital accumulation and upward mobility. I use plausibly exogenous variation generated by the Finnish war reparations (1944-1952) that forced the largely agrarian Finland to give 5% of its yearly GDP to the Soviet Union in the form of industrial products. To meet these terms, the Finnish government provided short-term industrial support that persistently raised the employment and production of treated, skill-intensive industries. I trace the impact of the policy using individual-level registry data and show that the likelihood of leaving agriculture for manufacturing and services increased substantially in municipalities more strongly affected by the war reparations shock. These effects were persistent: 20 years after the intervention, the reallocated workers remained in their new sectors and had higher wages. Younger cohorts affected by the new skill-intensive opportunities obtained higher education and were more likely to work in white-collar occupations by 1970. This result is consistent with higher returns to education. Finally, I link parents to children to study how the policy affected upward mobility. I show that mobility in both income and education increased in the exposed locations, as people in lower socioeconomic groups benefited from the structural change. Tracing Out the Finnish Kuznets Curve: Famine, Threat of Revolution, and Democratization We study the long-run development of Finland with a particular focus on some causes and consequences of inequality broadly defined. We show that the Finnish famine of 1866-1868 led to increased inequality in the long-run and tighter coercion in the labor markets of the early 1900s. Economic inequality at the time meant political exclusion, as voting rights and vote counts in municipal elections were tied to taxable income. We provide evidence consistent with discontent theories of conflict that these factors contributed to the emergence of the Finnish Civil War in 1918. The threat of revolution became real with the civil war and further led to the successful extension of the franchise. Municipalities with higher levels of inequality and more insurgents experienced a more drastic shift towards equality and higher levels of redistribution after the conflict. Can You Make an American? Compulsory Patriotism and Assimilation of Immigrants This paper investigates the success of assimilation efforts in the U.S. during the Age of Mass Migration. I focus on a largely overlooked case of American nation-building, the introduction of compulsory patriotic acts, such as the Pledge of Allegiance, to American schools in the late 19th century. Using a legislative change in the State of New York as an experiment, I show that immigrant children exposed to compulsory patriotism in school were more assimilated as adults, measured by naturalization, the naming of children, military service, and intermarriage. These positive effects on assimilation hold for immigrants from all the large origin countries. Overall, this paper provides evidence that even softer, hearts and minds types of interventions that do not provide any new information can have long-lasting effects.

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