Working Papers

Thilo R. Huning

Lecturer in Economics

Geography matters.

We only begin to understand how economic activity is shaped by geography, as standard growth models cannot explain why some nations fall behind, and some prosper. Why do cities emerge? How did all these 'good' institutions come along? How did the Monstrum Germanicum become the core of the European Union? What role does trade play? What are the implications for today's economic policy?

Working Papers

"The Origins and Dynamics of Agricultural Inheritance Traditions", joint with Fabian Wahl

University of York Discussion Paper in Economics 09/19

In this paper, we analyze the origins of agricultural inheritance traditions. Our case study is the German state of Baden-Württemberg, for which we have data on 3,382 municipalities. It is the first to test systematically a wide array of prevalent hypotheses about the Roman, medieval, and early modern roots of inheritance traditions and their change during the industrialization period and the early 20th century. We also analyze data on village desertion, parts of which we can attribute to the lack of flexible adaption. We find that rural inheritance traditions are primarily determined by geographic factors, especially soil quality, but also Germanic traditions, pre-historical land-abundance, Roman activity and the rise of feudalism during the middle ages. The politics of particular states like Imperial cities or the Duchy of Württemberg also mattered. Change in inheritance practices occurring primarily after industrialization took-off was mainly driven by access to railways, increasing population concentration and imitation and social interactions with people from areas with other traditions.

State: Preparing for resubmission after revise & resubmit

"The State Built on Sandy Ground: How Geography formed Brandenburg-Prussia"

What explains the emergence of a strong state in Brandenburg-Prussia? I combine an incomplete contract model of an agricultural society with historical narrative and empirical evidence. A long run comparison of the soils of Brandenburg-Prussia with its main rivals questions the consensus of its geographical disadvantage. My analysis of province-level data from 1650–1682 suggests that the uniform geography
in Brandenburg left behind a unique combination of a landed nobility dependent on a central state. Favorable geography eased taxation, allowed centralization after the Thirty Years War, and created the nucleus of the later Prussian state.

State: Submitted

"The Fetters of Inheritance? Equal Partition and Regional Economic Development", joint with Fabian Wahl

European Historical Economics Society Working Paper No. 165

Abstract. How can agricultural inheritance traditions affect structural change and economic development in rural areas? The most prominent historical traditions are primogeniture, where the oldest son inherits the whole farm, and equal partition, where land is split and each heir inherits an equal share. In this paper, we provide a theoretical model that links these inheritance traditions to the local allocation of labor and capital and to municipal development. First, we show that among contemporary municipalities in West Germany, equal partition is significantly related to measures of economic development. Second, we conduct OLS and fuzzy spatial RDD estimates for Baden-Württemberg in the 1950s and today. We find that inheritance rules caused, in line with our theoretical predictions, higher incomes, population densities, and industrialization
levels in areas with equal partition. Results suggest that more than a third of the overall inter-regional difference in average per capita income in present-day Baden Württemberg, or 597 Euro, can be explained by equal partition.

State: Submitted

"You Reap What You Know: Origins and Dynamics of State Capacity", joint with Fabian Wahl

European Historical Economics Society Working Paper No. 101

Abstract. We provide a theoretical model linking limits to the observability of soil quality to state rulers' ability to tax agricultural output, which leads to a higher political fragmentation. We introduce a spatial measure to quantify state planners' observability in an agricultural society. The model is applied to spatial variation in the 1378 Holy Roman Empire, the area with the highest political fragmentation in European history. We find that differences in the observability of agricultural output explain the size and capacity of states as well as the emergence and longevity of city states. Grid cells with higher observability of agricultural output intersect with a significantly lower number of territories within them. Our results highlight the role of agriculture and geography, for size, political, and economic organization of states. This sheds light on early, though persistent, determinants of industrial development within Germany, and also within Central Europe.

State: Preparing for submission

"How Britain Unified Germany: Endogenous Trade Costs, and the Formation of a Customs

Union", joint with Nikolaus Wolf

CEPR Discussion Paper no. 13634; VoxEU blog entry

Abstract. We analyze the foundation of the German Zollverein as an example of how geography can shape institutional change. We show how the redrawing of the European map at the Congress of Vienna 1815–notably Prussia's control over the Rhineland and Westphalia–affected the incentives for policymakers to cooperate. Our argument comes in three steps. First, we show that the new borders were not endogenous to trade. They were at odds with the strategy of Prussia in 1815, but followed from Britain's intervention at Vienna regarding the Polish-Saxon question. Second, we develop a theoretical framework, where state planners set tariffs on imports and transits to maximize revenue. We show that in a world with transit tariffs a revenue-maximizing state planner faces a trade-off between benefits from cooperation and the cost of losing the geographical advantage. In a third step, we calibrate the model combining historical data on tariffs, freight rates, market sizes with GIS data on lowest costs routes under endogenous tariffs. We then run counterfactuals to show how borders affected incentives: if Prussia would have succeeded with her strategy to gain the entire Kingdom of Saxony instead of the western provinces, the Zollverein would not have formed. We conclude that geography can shape institutional change. To put it differently, as collateral damage to her intervention at Vienna ``Britain unified Germany''.

State: Preparing for submission