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Political Power, Resistance to Technological Change and Economic Development: Evidence from the 19th century Sweden

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Listed:
  • Tyrefors Hinnerich, Bjorn

    () (Dept. of Economics, Stockholm University)

  • Lindgren, Erik

    () (Dept. of Economics, Stockholm University)

  • Pettersson-Lidbom, Per

    () (Dept. of Economics, Stockholm University)

Abstract

This paper empirically tests the hypothesis that landed elites may block technological change and economic development if they fear that they will lose future political power (Acemoglu and Robinson (2002, 2006, and 2012). It exploits a plausible exogenous change in the distribution of political power of the landed elites, i.e., a Swedish suffrage reform in 1862 which extended the voting rights to industrialists at the local level. Importantly, the votes were also weighted according to taxes paid. Thus, the higher taxes paid the more votes received. As a result, the landed elites had an incentive to block industrialization and technological progress since they otherwise would be “political losers”. We find that the change in political power from the landed elites to industrialists, through the extension of suffrage rights, lead to more investments in railways, faster structural change, and higher firm productivity. We also find that the change of political power affected both labor coercion and the adaption of labor-saving technologies within the agriculture sector along the lines suggested by Acemoglu and Wolitzky (2011) and Acemoglu (2010). Specifically, we find that is more labor coercion and less investments in labor-saving technologies in areas were landowners have more political power. We also provide evidence that many demographic outcomes were affected by the change in political power. Moreover, we find strong evidence of persistence in both extractive economic and political institutions even after the weighted voting system was abolished and universal suffrage introduced in 1919. Specifically, local governments that were previously political controlled by the landed elites were still using both extractive economic and political institutions (Acemoglu and Robinson (2008)).

Suggested Citation

  • Tyrefors Hinnerich, Bjorn & Lindgren, Erik & Pettersson-Lidbom, Per, 2017. "Political Power, Resistance to Technological Change and Economic Development: Evidence from the 19th century Sweden," Research Papers in Economics 2017:5, Stockholm University, Department of Economics.
  • Handle: RePEc:hhs:sunrpe:2017_0005
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    Keywords

    Economic development and growth; Political institutions; Technological change; Industrialization; Labor coercion; Labor-saving technologies; Persistence of extractive economic and political institutions;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F15 - International Economics - - Trade - - - Economic Integration
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • J47 - Labor and Demographic Economics - - Particular Labor Markets - - - Coercive Labor Markets
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
    • N53 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Europe: Pre-1913
    • N63 - Economic History - - Manufacturing and Construction - - - Europe: Pre-1913
    • N73 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: Pre-1913
    • N93 - Economic History - - Regional and Urban History - - - Europe: Pre-1913
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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