Institutions, Inequality and Societal Transformations

Abstract: Institutions matter for economic development. This thesis consists of three self-contained articles which provide different contributions to institutional economics.The first article studies short-run changes in gender norms. It takes advantage of recent developments in machine learning algorithms to study changes in norms in Swedish tweets. More specifically, gender norms are defined in a comprehensive data-driven manner by training an LSTM neural network model. The model functions as a tool to create a measure on gender norms experienced by people in their everyday life, which is used to study norm-changes in relation to the Metoo movement. After an American actress encouraged women to share their experiences of sexual harassment under the Metoo hashtag, the Metoo movement spread to Sweden the 17th of October 2017. The event’s date of occurrence is unrelated to the Swedish gender norm environment and, thus, provides a credible context for identifying an effect. Tweets with the Metoo-hashtag and related hashtags are removed from the analysis to ensure not to capture the effect of a more intensive gender debate. The article shows that Swedish tweets reflect gender norms less six months after the Metoo event, compared to five months before. The norm changes of the previous year function as a comparison group. The result is robust to the inclusion of calendar day and Twitter-user fixed effects. The result is also supported with placebo tests on an unrelated norm which is not expected to change. The article provides an example of norms changing rapidly, raising questions about previous literature’s conceptualization of norms as being constant.The second article investigates the effect of changing from an indirect (parliamentary) to a direct (presidential) democratic system on economic growth in Indonesia. In an indirect system, the local leader is appointed by the local parliament, whereas, in a direct system, the local leader is elected by the people. The main contribution of the article is to have a credible identification strategy to investigate the effect of a change in one specific political institution. The date of switching from the indirect to the direct democratic system differed for the various districts. The date of the switch is dependent on when the former dictator Suharto installed district heads, and therefore one expects no inherent differences in the growth rates of the districts other than from the change of system. The article relies on comparing districts that had direct elections earlier to districts that had them later. It shows no effect on economic growth. The results suggest that the form of democracy has a limited impact on governance, which is confirmed by examining a large number of indicators on governance (such as, the district head being corrupt). The result points to no effects of the forms of democracy on growth, which can inform policy regarding the choice of institutional design.The third and last article presents new estimates of municipality-level income inequality for Sweden in 1871 and 1892. There exists scant information on the evolution of inequality during the nineteenth century, especially on income inequality, and the article contributes with a descriptive piece of evidence from the early phase of the Swedish industrialization process. The new municipality-level estimates are based on data on the vote distribution. In the electoral system at this time, votes were allocated in proportion to people’s income, which renders it possible to retrieve income figures from the data source. The article shows that the income share of the top one percent richest in the industrial sector in the median municipality increases between 1871 and 1892, whereas inequality in the agricultural sector is stable. The article complements prior research on national-level wealth inequality by strengthening the interpretation of increasing inequality in the second half of the nineteenth century. Researchers can use the new estimates, available under an open-access license online, in further studies.