Sample_solutions_2008 - Economics 183 DEVELOPMENT OF...


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Economics 183 DEVELOPMENT OF ECONOMIC INSTITUTIONS IN THE UNITED STATES Professor Leah Boustan Sample midterm solutions 2008 Question 1 1. Soil conducive for growing sugar b Large slave plantations Sugar, coffee, and cotton exhibit economies of scale in cultivation. That is, they are most efficiently grown on large plantations with many workers, rather than on small family farms. As a result, sugar-growing regions in the Caribbean and Brazil imported slaves to man their plantations. Even within the United States, the cotton-growing region in the South imported slaves, while the wheat-growing regions in the North did not. 2. Slave plantations b Right to vote reserved for small elite Slave societies are characterized by a large labor force overseen by a small managerial class. Because slaves lack the economic or political power to demand voting rights, it is common for plantation societies to have a limited franchise extended only to plantation owners and overseers. In contrast, societies organized into small family farms have a more equal distribution of wealth, which often translates into equal access to the ballot box. 3. According to the evidence in Panel A, we can classify Brazil as a sugar producer and group the United States and Argentina together as wheat producers. If anything, there is an argument to be made that the US represents an “intermediate” case that produces both wheat and (some) sugar. The Sokoloff/Engerman (SE) hypothesis predicts that sugar producers (that is: Brazil) will have a restrictive franchise. The data in Panel B is consistent with this prediction. Brazilians were required to have a certain wealth level or be able to read in order to vote in both 1900 and 1940. The SE hypothesis further predicts that wheat producers will have an open franchise. The US and Argentina both provide partial evidence in favor of this hypothesis, through the pattern is less certain. Argentina had a wealth or literacy requirement for voting in 1900, which it abolished by 1940. The US had neither requirement in place in its northern states, but did have literacy requirements in place in the South, where both cotton and some sugar were grown (see the *). 4. Sokoloff and Engerman argue that an open franchise leads to economic growth. The general
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Sample_solutions_2008 - Economics 183 DEVELOPMENT OF...


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