How responsive is the location of economic activity to shocks? This paper uses a new data set on the location of factories in the Russian Empire (1890, 1908) and the Soviet Union (1989), supported by modern nightlight data, to explore the forces determining the spatial location of industrial production in Eurasia over the long twentieth century. Over this period, the region experienced a radical shift in its economic system from market to central planning and back again. Production was also subjected to various shocks, including war and the associated relocation of firms, forced population movement, and infrastructure investments. We assess to what extent these shocks changed the role of agglomeration effects, local labour inputs and market access in determining industry location. We find that shocks to labour fundamentals shifted the economy to new spatial equilibria. Nonetheless, the shifts were small in magnitude and these forces were not powerful enough to eradicate the path-dependent effects of Tsarist locations that were still evident in the industrial structure of the region even a century later. These results suggest the impact of even severe shocks to a spatial equilibrium to be modest at the aggregate level.
This introduction presents the rationale for the special issue "Institutions in flux: The dynamics of formal and informal rules". It argues that while institutions are central to economic, political and social outcomes, institutional analysis must also explain how rules and norms change, why reforms succeed or fail, and how formal and informal institutions interact. The seven papers in the issue study institutional change across different settings, methods and mechanisms, including reform sequencing, civil society, public-goods provision, censorship, globalization and uncertainty. Together, they show that institutional change is shaped by credibility, coalitions, enforcement, information, culture and power. The special issue therefore contributes to a dynamic understanding of institutions, emphasizing not only their consequences but also their origins, adaptation and unintended effects.
Although compulsory education (CE) laws have widened access to schooling and shaped economic, social, and health outcomes, it remains unclear whether they reduce long-run health inequalities. We study the effect of CE policies on health inequality using height Gini indices for 66 countries between 1810 and 2000, estimating intent-to-treat effects through a staggered difference-in-differences design. Our results indicate that CE exposure reduces the height Gini. The inequality-reducing effect appears to operate mainly through increased years of schooling and reduced fertility. The effect is not uniform across regions, being largest in Europe, and it is driven largely by later extensions of CE duration rather than initial adoption alone. Overall, the findings indicate that education policy can meaningfully narrow health disparities over time, but its effectiveness depends on the scale of the mandate and the timing of adoption.
This paper investigates the effect of a major judicial reform—the establishment of interprovincial circuit tribunals (ICTs)—on politically biased court outcomes. Using a unique data set of commercial civil cases involving listed firms in China and based on a difference-in-differences approach, we find that the ICTs effectively curb political favoritism in the judiciary, as evidenced by a significant decline in the win-rate disparity between politically connected and unconnected firms following the reform. The effects are more pronounced for firms connected to higher-ranking officials, those facing higher travel costs to appeal for retrial pre-reform, cases involving larger monetary stakes, and regions characterized by weaker legal environments. Moreover, the mechanism analysis suggests that the reform reshapes local courts’ incentives to yield to political interference through career concerns and the special petition mechanism. Finally, further analysis indicates that this judicial reform improves the quality of court decisions, enhances judicial accessibility, and mitigates local protectionism. Overall, the ICTs have significantly deterred political interference in court proceedings and contributed to a more impartial judicial environment in China.
This introduction presents the rationale for the special issue “Institutions in flux: The dynamics of formal and informal rules”. It argues that while institutions are central to economic, political and social outcomes, institutional analysis must also explain how rules and norms change, why reforms succeed or fail, and how formal and informal institutions interact. The seven papers in the issue study institutional change across different settings, methods and mechanisms, including reform sequencing, civil society, public-goods provision, censorship, globalization and uncertainty. Together, they show that institutional change is shaped by credibility, coalitions, enforcement, information, culture and power. The special issue therefore contributes to a dynamic understanding of institutions, emphasizing not only their consequences but also their origins, adaptation and unintended effects.
