(Job Market Paper)
Abstract: English common law was an important investment in state capacity in medieval Europe, and has been linked to growth and more efficient factor markets. However, previous studies of the relationship between common law and development have been limited by endogeneity and data availability. This paper addresses these issues with using novel estate-level data from medieval Britain. The effect of legal institutions is identified by exploiting the quasi-random boundary of common law jurisdiction in the borderlands between England and Wales. This boundary was plausibly exogenous, not identical to ancient or modern borders, and did not correspond to differences in other institutions. I examine the effects of common law on land tenure and capital investment, controlling for pre-common law estate characteristics. I find that common law caused a shift towards more efficient forms of land tenure. Investment in physical capital increased for smallholders but decreased for large landowners, reflecting a tension between improved access to credit and decreased bargaining power relative to tenants. Evidence from subsequent centuries suggests a persistent but diminishing positive effect on commercialization in agriculture.
Conflict, Guilds, and Barriers to Entry in European Towns: 1300-1800 (Working paper)
European craft guilds were an important link between early modern political institutions and skilled labor markets. Recent research suggests that the some of the advantage of the British and Dutch in early industrialization can be attributed to the flexibility of the markets for skilled labor in Great Britain and the Low Countries. One of the most important cause of this is the weakness of early modern British and Dutch craft guilds, which allowed for more elastic entry into skilled trades. As guilds regulated trades across Europe, their ability to restrict entry was an important source of variation in how labor markets functioned before and during the Industrial Revolution. However, the determinants of the power of craft guilds have not been examined empirically. This paper attempts to fill this gap in the literature. I collect data on guild participation in local government from town charters in Germany, Great Britain, and the Netherlands, to measure formal political privileges of guilds in northern European cities from 1300-1800. To ensure comparability of the data I focus on the activities of textile guilds, one of the most important sectors in the early industrial economy. I also construct indices of textile guild market power and restrictions on entry into skilled labor markets using data from secondary sources. The resulting panel contains data on the strength of textile guilds in 9 Western European countries from 1300-1800. To guide the empirical analysis, I develop a model in which guilds and merchants compete for influence within towns. The model predicts guild power is increasing in the value of public goods, suggesting towns threatened with conflict face pressure to bring guilds into the governing coalition. I test this prediction using a panel of 499 cities from 1300-1800, and find robust evidence for a positive relationship between exposure to violent conflict and guild power using both measures. To account for potentially endogenous participation in conflicts, I limit the definition of exposure to violence to conflicts in which the city was neutral. The results connect guild power over labor markets to the state’s ability to maintain order, linking long run changes in the flexibility and openness of labor markets to the development of state capacity in Europe over this time period.