Three essays in economics

Abstract

This thesis consists of three chapters. I, first, study the long-run growth of finance. I construct comprehensive national financial balance sheets, financial accounts and production accounts for twelve advanced economies over the past two centuries using hundreds of historical sources. Financial asset-to-output ratios more than quintuple while the output share of finance industry more than quadruples. Despite this dramatic growth in the volume of finance, financial deepening is slow and the structure of finance is stable. Financial growth over the past two centuries is primarily driven by capital formation. These results shed new light on the recent dramatic expansion of financial assets, services, and debt, and directly link these secular trends to an ongoing debate on rising wealth-income ratios and inequality. The second chapter, joint with Johannes Hermle, studies the impact of a male breadwinner norm on gender inequality.

We develop a marriage market matching model featuring a male breadwinner norm - a discontinuity in husbands' marginal utility from spousal income. We predict that a norm should cause a concave kink in households' relative income distribution, a kinked increase in the divorce probability and a kinked increase in household good provision by females at the point where both spouses earn the same. We test these predictions using large administrative tax data from Germany. Consistent with the presence of a male breadwinner norm, we find a sharp kink in the relative income distribution at the 50% threshold as well as a crowd-out of couples with a female primary earner relative to random matching. The third chapter studies the evolution of financial systems in common and civil law countries since 1870.

I show that, In line with legal origins theory, civil law countries have always had significantly smaller capital markets, smaller financial sectors and more bank-reliant financial systems than common law countries. Convergence immediately prior to World War I can be explained by increased financial integration and free capital movement, while financial fragmentation and shocks to the capital stock during and after the war help explain the strong divergence afterwards.