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Institutions, Govt & Society - Module II

Prof. Paolo Pinotti


Culture

Introduction

divergence between Northern and Southern Italy (after 1861)


6000

4000
3000
2000
1000
0

1861
1867
1873
1879
1885
1891
1897
1903
1909
1915
1921
1927
1933
1939
1945
1951
1957
1963
1969
1975
1981
1987
1993
1999

GDP per capita, 1911 prices

5000

GDP per capita, North (1911 prices)

GDP per capita, South (1911 prices)

Introduction

differences in other outcomes

Introduction

variation across regions within the same country, GDP

Introduction

variation across regions within the same country, murders

Introduction
if formal institutions are what matters (Acemoglu & co., NOT
North) why large gaps between regions/states under the same
institutions?
Putnam:
does the performance of an institution depend on its social,
economic, and cultural surround?
if we transplant institutions, will they grow in the new setting as they
did in the old?

notice: Putnam does not discard formal institutions, actually


hes primarily interested in their functioning (as mediated by
the cultural surround)

History

culture

Institutions

The experiment
creation of 15 regional governments in 1970
primary responsability for health, agriculture, urban affairs housing,
public works, vocational education (expenditure 10% GDP in 1990)
same legislative framework

The Italian regional experiment was tailor-made for a


comparative study of the dynamics and ecology of institutional
development. Just as a botanist might study plant development
by measuring the growth of genetically identical seeds sown in
different plots, so a student of government performance might
examine the fate of these new organizations, formally identical,
in their diverse social and economic and cultural and political
setting

Institutional performance
outcome of interest is NOT economic output, rather how well
institutions respond to citizens demands
measure aggregating 12 indicators:
1. cabinet stability

7. family clinics

2. budget promptness

8. industrial policy instruments

3. statistical and information services

9. agricultural spending capacity

4. reform legislation

10. local health unit expenditures

5. legislative innovation

11. housing and urban development

6. day care centers

12. bureaucratic responsiveness

Institutional performance
relationship with citizens satisfaction

Institutional performance
territorial divides

Civic communities
formal institutions constant across regions importance of
culture
one aspect of culture: civic communities
civic engagement: interest in public issues and devotion to public
causes
de-facto political equality
solidarity, trust, and tolerance
voluntary associations

measurement:
number of voluntarily associations
newspaper readership
voting turnout at referenda (no vote-buying, no sanctions for
abstension)
preference voting (patron-client politics, inverse measure of civicness)

Measurement of civicness

relationship between referenda turnout and preference voting

Civic communities
territorial divides

Civicness & institutional performance

Civicness & citizens satisfaction

The roots of the civic community


critical junctures in Italian history during the Middle-Ages
1. since 1100, Norman kingdom in the South

very rich, administratively advanced, highly organized


autocratic, strong monarchy under Friedrick II

2. free-city experiences in the North (1200-1500)

oases amidst a feudal forest


town councils elected by citizens, guilds of craftsmen and tradesmen
to provide self-help and mutual assistance
like the Norman kingdom, free-cities were a reaction to a state of
chaos during the middle ages, however they privileged horizontal
cooperation among citizens, rather than autocracy

The roots of the civic community

The transition to Italian Unification


until the XIII century both regimes were economically very
successful
around year 1300, Palermo, Venice, and Florence were the 3 largest
cities in Europe (100,000+ people)

starting in XIV century, decline of both communal cities and


the Southern Kingdom
Black Death (1348, 1630-31, 1656-57)
conflicts between France and Spain fought on the Italian territory

XVII: re-feudalization of Italy, autocratic regimes both in the


North and in the South
domination by foreign dynasties in the South (Hasburgs and Borbons)
explicit strategy of disruption of trust bonds between individuals

After the Italian Unification (1861)


North: mutual aid societies
benefits to the aged and incapacitated members, aid to families of
deceased members, compensation for industrial accidents, payments
to unemployed workers, funeral expenses, nursing and maternity care,
education (night schools, elementary instruction, libraries)
voluntary welfare state, similar to medieval self-help associations
sometimes ideologically oriented (white vs. red) but common trait:
collective solidarity and horizontal collaboration

South:
vertical rather than horizontal political and social bonds (clientelism)
occasional revolts against the authority failed to get organized
(brigandage)
mafia: state inefficiency + mistrust = private protection of property
rights, mafia as a third-party enforcer (Gambetta, 1993)

Civic traditions, 1860-1920

Presistence of civic traditions

Civic traditions and performance

Culture and the institutional choice


Putnam: formal institutions work differently in different
environment
related question: does the choice of optimal institutions
depend on the cultural environment?
Algan & Cahuc (2009): two main models of labor market
institutions in Europe
1.
2.

high unemployment benefits & low job protection (flexicurity)


low unemployment benefits & high job protection

Algan and Cahuc (2009)

Algan and Cahuc (2009)


the high benefits/low protection seems to work much better,
so why the other countries are not adopting it?

Culture and flexicurity


Algan & Cahuc (2009): the unemployment
insurance design raises moral hazard issues
that are much more difficult to overcome in
countries where individuals are more prone to
cheat over government benefits. This result
has far-reaching consequences for the policy
reforms agenda. It indicates that civic
attitudes impose real constraints on the choice
of labor market institutions

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