institutional harmonization and economic integration among nations in world history. While economic integration was increasing throughout the 1970s and 1980s, the extent of integration has come sharply into focus only since the collapse of communism in 1989. In 1995 one dominant global economic system

Economic integration and redistribuitive taxation

This essay provides a perspective on the trend towards integrating psychology into economics. Some topics are discussed, and arguments are provided for why movement towards greater psychological realism in economics will improve mainstream economics.

We estimate the respective contributions of institutions, geography, and trade in determining income levels around the world, using recently developed instrumental variables for institutions and trade. Our results indicate that the quality of institutions “trumps ” everything else. Once institutions are controlled for, conventional measures of geography have at best weak direct effects on incomes, although they have a strong indirect effect by influencing the quality of institutions. Similarly, once institutions are controlled for, trade is almost always insignificant, and often enters the income equation with the “wrong ” (i.e., negative) sign. We relate our results to recent literature, and where differences exist, trace their origins to choices on samples, specification, and instrumentation. The views expressed in this paper are the authors ’ own and not of the institutions with which they are affiliated. We thank three referees, Chad Jones, James Robinson, Will Masters, and participants at the Harvard-MIT development seminar, joint IMF-World Bank Seminar, and the Harvard econometrics workshop for their comments, Daron Acemoglu for helpful conversations, and Simon Johnson for providing us with his data. Dani Rodrik gratefully acknowledges support from the Carnegie Corporation of New York. Commerce and manufactures can seldom flourish long in any state which does not enjoy a regular administration of justice, in which the people do not feel themselves secure in the possession of their property, in which the faith of contracts is not supported by law, and in which the authority of the state is not supposed to be regularly employed in enforcing the payment of debts from all those who are able to pay. Commerce and manufactures, in short, can seldom flourish in any state in which there is not a certain degree of confidence in the justice of government.-- Adam Smith, Wealth of Nations I.

Measures of inequality are used by economists to answer a wide range of questions. Is the distribution of income more equal than it was in the past? Are underdeveloped countries characterised by greater inequality than advanced countries? Do taxes lead to greater equality in the distri-

The potential usex of public resources and powers to improve the economic stuius of economic groups (such as industries and occupations) are analyzed to provide a scheme of the demand for regulation. The characteristics of the political process which allow relatively small groups to obtain

We propose a measure of capital market integration arising from a conditional regime-switching model. Our measure allows us to describe expected returns in countries that are segmented from world capital markets in one part of the sample and become integrated later in the sample. We find that a

In this paper we introduce the Online Recruitment System for Economic Experiments (ORSEE). With this software experimenters have a free, convenient and very powerful tool to organize their experiments and sessions in a standardized way. Additionally, ORSEE provides subject pool statistics, a

of employment in response to fluctuations in demand. Economic integration is potentially Pareto-improving but, in the absence of a system of compensation, workers are harmed by greater labor mobility while the owners of firms benefit from higher profits.

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