Development of the American Economy.

• Position: Bureau News - Papers discussed at March 8, 2003 meeting - Includes "General Purpose Technologies"

The NBER's Program on Development of the American Economy met in Cambridge on March 8. Program Director Claudia Goldin of Harvard University organized the meeting. The following papers were discussed:

Howard Bodenhorn and Christopher S. Ruebeck, NBER and Lafayette College, "The Economics of Identity and the Endogeneity of Race"

Dora L. Costa, NBER and MIT, "Race and Pregnancy Outcomes n the Twentieth Century: A Long-Term Comparison"

Chiaki Moriguchi, NBER and Northwestern University, "Did American Welfare Capitalists Breach their Implicit Contracts? Preliminary Findings from Company-Level Data, 1920-1940"

Mark Carlson, Federal Reserve Board, and Kris J. Mitchener, NBER and Santa Clara University, "Branch Banking, Bank Competition, and Financial Stability"

Alan L. Olmstead, University of California, Davis, and Paul W. Rhode, NBER and University of North Carolina, "An Impossible Undertaking: The Eradication of Bovine Tuberculosis in the United States"

Boyan Jovanovic, NBER and New York University, and Peter Rousseau, NBER and Vanderbilt University, "General Purpose Technologies"

Economic and social theorists have modeled race and ethnicity as one form of personal identity produced in response to the costliness of adopting and maintaining a specific identity. Bodenhorn and Ruebeck look at the free African-American population in the mid-nineteenth century to investigate the costs and benefits of adopting alternative racial identities. During this period light-skinned African-Americans could, and often did, choose to differentiate themselves from dark-skinned African-Americans. The authors model the choice as an extensive-form game, in which whites choose whether to accept a separate mulatto identity and mixed-race individuals then choose whether to adopt a mulatto identity. Adopting a mulatto identity generates pecuniary gains, but imposes psychic costs. The authors quantify "the complexion gap" and find that mulattoes held significantly more wealth than blacks. Finally, they relate the complexion gap to community factors and find that the benefits of adopting a mulatto identity increa sed with the absolute size of the mulatto community, but decreased as the mulatto percentage of the African-American population increased at the neighborhood and city level. Thus, mulattoes benefited from white preferences when they represented a modest share of the African-American population. Yet if most African-Americans in a city were light-skinned, they...