Culture matters

My wonderful NYU Economics colleague Raquel Fernandez has been carrying out a fascinating research program on the effect of culture on development outcomes. The academic literature on this is exploding, and Raquel surveys it in a recent paper. A simple yet powerful methodology for exploring the role of culture is to study differences in behavior among second-generation immigrants to the U.S. The idea is that all of them face a similar environment in the US, yet bring with them the cultural differences of their parents' country of origin. So differences in immigrant behavior could be attributed to culture (with a large number of caveats that Raquel addresses in her paper).

The figure below shows the association between attitudes about "trust" in the country of origin and "trust" in immigrants to the US from that country.

A second figure shows the association between female labor force participation in the country of origin and how many women work among immigrant groups.

Researching culture used to be taboo in economics; thank goodness that has changed. The finding that "culture matters" reinforces the recent general finding in academic development research that very long-run factors matter more in development than we used to think.

18th century wetbacks

Update: see end of post

Why should the Palatine Boors be suffered to swarm into our Settlements, and by herding together establish their Language and Manners to the Exclusion of ours? Why should Pennsylvania, founded by the English, become a Colony of Aliens, who will shortly be so numerous as to Germanize us instead of our Anglifying them, and will never adopt our Language or Customs, any more than they can acquire our Complexion. (Benjamin Franklin (1751)).

In the first half of the 18th century, there was a lot of immigration from the Palatinate region of German (southwestern region around Mannheim and Heidelberg) to the US, mainly through Philadelphia. The Palatinate had been devastated by repeated wars since the Thirty Years War a century earlier, so migrants sought better economic opportunities across the water. They shipped up the Rhine to Rotterdam, then sailed for Philadelphia, often paying for their passage with indentured servitude. Ben Franklin was apparently not a big fan of these immigrants, whom he also labeled "stupid" and "swarthy" (as compared to the genuine "whites," the English, hence the reference above to "our Complexion").

And now for yet another one of those embarrassingly self-indulgent personal connections. One swarthy stupid German migrant who arrived in Philly in 1742 was named Conrad Oesterlen; his last name was later Anglicized to Easterly.

UPDATE : Arizona announces ban on all immigrants who arrived after 1840.

(API) Arizona governor Bobby Lee Jones-Scott announced today that the Arizona law had been fixed to eliminate all inconsistencies by banning any immigrants who arrived after 1840. Jones-Scott explained that after 1840, immigrants started deviating from America's Protestant heritage: "in the 1840s, we started getting them people who was Papists, Jews, Syrian Orthodox, Shinto, Muslim, and all those other religions that I can hardly keep head or tail of, and they had all these weird rules about shellfish, pork, and eating only fish on Fridays." Unconfirmed and frankly fictional sources confirmed that all candidates for public office in Arizona had endorsed the new fully consistent legal framework for Arizona, although a few candidates were rumored to have had to make last-minute conversions to Anglicanism.

TWOFER: Here’s how Haitians can rescue the US from its budget crisis and save themselves

In 2001, I published an obscure paper that concluded “Econometric tests and fiscal solvency accounting confirm the important role of growth in debt crises.” Based on this, I can now say that Haitians can rescue the US from an impending budget crisis. The crisis is already severe, with previously unthinkable warnings that US government bonds might lose their AAA rating. What does this have to do with Haitians? Here’s the longer, more technical version (if you’re impatient, skip to next paragraph): budget solvency is about the future, not just about the present. Our ability to service our government debt is greater the higher is expected growth of the economy, because that means higher expected growth of tax revenues. If you expect tax revenue to be a lot higher tomorrow because of high growth, then you don’t have to worry as much about where you find the tax money tomorrow to pay interest and amortize principal on the debt. Economic growth equals (Growth of GDP per person) PLUS (Growth of Population). So one overlooked aspect of Population Growth is that it is GOOD for preventing budget and debt crises. And population growth is driven in large part these days in the US by immigration from places like … Haiti. Of course it will take more than Haiti alone to supply enough immigrants, but letting in more immigrants to the US from poor countries is desirable already for both us and the immigrants.

Here’s the short version. If you are worried about having enough tax revenue to pay interest on the government debt, find more taxpayers! And look, here are some people volunteering to become new taxpayers: Haitian immigrants fleeing quakes and poverty! So let’s open the door to our Haitian fiscal rescuers, who will also lift themselves out of poverty as dramatized by a previous post. It’s a TWOFER!

NOTES: my attempt to make an exam question out of this did not attract a large response (OK I was mostly just trying to get out of writing the blog post last night). It did produce one very funny satire, and one good two-part answer, the second part of which was the “right” answer (a special virtual Rolex (Aid) Watch prize for Kevin!)

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