Essays on political boundaries
Author(s)Weese, Eric Gordon
Massachusetts Institute of Technology. Dept. of Economics.
Daron Acemoglu and Abhijit Banerjee.
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In the first chapter of this thesis, I study Japanese municipal mergers using a political coalition formation model. Political coalition formation games can describe the formation and dissolution of nations, as well as the creation of coalition governments, the establishment of political parties, and other similar phenomena. These games have been studied from a theoretical perspective, but the models have not been used extensively in empirical work. This paper presents a method of estimating political coalition formation models with many-player coalitions, and then applies this method to the recent heisei municipal amalgamations in Japan to estimate structural coefficients that describe the behaviour of municipalities. The method enables counterfactual analysis, which in the Japanese case shows that the national government could increase welfare via a counter-intuitive policy involving transfers to richer municipalities conditional on their participation in a merger. In the second chapter, I examine selection effects in the cross-country state system. The countries present today are only part of a larger set of potential countries. Since many modern states originated as colonies, colonial data can be used to examine correlates of independence. During decolonization, larger and more economically successful colonies were more likely to become independent. This selection effect may explain why, despite commonly held opinions about efficiencies of scale, small countries appear to have higher GDP both in terms of growth and levels. The estimated selection model implies that analysing only currently independent countries can introduce substantial selection bias.(cont.) An example of this is presented with the Frankel and Romer trade-instrument regression, where the selection effect biases the coefficient on the instrument upwards, and a regression on an unselected sample yields a negative and statistically insignificant coefficient. In the third chapter, I examine the endogeneity of linguistic fragmentation, assuming that national borders have already been fixed. Users of ethnic fragmentation indices generally assume that fragmentation is constant and exogenous. In many countries, however, linguistic fragmentation has decreased a great deal over the past two centuries, and frequently-used measures of ethnic fragmentation rely heavily on linguistic differences to distinguish ethnic groups. Previous qualitative research suggests that linguistic homogenization is correlated with administrative centralization. This hypothesis is tested empirically using the population of the largest city in each country in 1900 as a proxy for centralization, along with the population of the country as a whole and its surface area. Using these proxies produces a statistically significant relationship between centralization and linguistic homogenization. Furthermore, when these variables are included in regressions predicting economic growth the coefficient on fragmentation is halved and becomes statistically insignificant. Similar results are obtained when the relationship between fragmentation and corruption is examined.
Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2009.Includes bibliographical references.
DepartmentMassachusetts Institute of Technology. Department of Economics
Massachusetts Institute of Technology