• “Keeping Dictators Honest: the Role of Population Concentration”
  JOB MARKET PAPER (with Filipe R. Campante, Harvard University), version December, 2007,

Abstract: In order to explain the apparently paradoxical presence of acceptable governance in many non-democratic regimes, economists and political scientists have focused mostly on institutions acting as de facto checks and balances. In this paper, we propose that population plays a similar role in guaranteeing the quality of governance and redistribution. We argue and demonstrate with historical evidence that the concentration of population around the policy making center serves as an insurgency threat to a dictatorship, inducing it to yield to more redistribution and better governance. We bring this centered concept of population concentration to the data through the lenses of four natural axioms, prove the existence and uniqueness of its measure, and show its empirical superiority to existing measures. The evidence supports our predictions: only in the sample of autocracies, population concentration around the capital city is positively associated with better governance and more redistribution (proxied by post-tax inequality), in OLS and IV regressions. Finally, we provide arguments to dismiss possible reverse causation as well as alternative, non-political economy explanations of such regularity, discuss the general applicability of our index and conclude with policy implications.

• “ A Centered Measure of Spatial Concentration: A Gravity-Based Approach with an Application to Population and Capital Cities”
  (with Filipe R. Campante, Harvard University), October 2007

Abstract: We construct an axiomatic index of spatial concentration around a center or capital point of interest, a concept with wide applicability from urban economics, economic geography and trade, to political economy and industrial organization. We spell out two basic properties (decomposability and monotonicity), and provide a simple model of migration that motivates a third property, the ``axiom of gravity'', which disentangles the attraction exerted by the capital point of interest. We show that there is a unique class of functions that has all these properties, defined over any Euclidian space. We also establish a formal connection between our index and the gravity equation used in the trade literature. Finally, we illustrate the application of our index by computing the concentration of population around capital cities across countries and US states. The cross-country data show interesting correlation patterns with population size, which is not captured by alternative measures, and with measures of quality of governance, which vary according to the level of democracy. It can also help test conjectures about the determinants of the choice of where to locate the capital city.

•  “ Inequality, Redistribution and Population”
  (with Filipe R. Campante, Harvard University), June 2007, submitted to the Journal of Public Economics.

Abstract: We document a negative relationship between population size and inequality in the cross-country data. We propose an explanation built on the existence of a size effect in the political economy of redistribution, particularly in the presence of different channels of popular request for redistribution, e.g. “institutional” channels and “revolutions”. Based on the assumption that the threat of revolution is directly related to the number of people that may attempt to revolt, the theory predicts that the stylized fact initially uncovered by the paper can be refined as follows: there is a negative relationship between population size, and its geographical concentration, and post-tax inequality in non-democracies. We subject these predictions to extensive empirical scrutiny in a cross-country context, and the data robustly confirm these patterns of inequality, population, and the interaction with democracy.

• “Redistribution and Population Size in China”
  (with Filipe R. Campante and Li Han, Harvard University)

Abstract: This paper investigates village level policies in China through the theoretical lense of Campante Do (2007), wherefrom it predicts a positive relationship between population size and the progressivity of village taxation. Moreover, this effect should be dampened by the democratization of certain villages. These effects work in a political economy model where absolute number of dissidents matter to redistributive policies. We analyze a unique dataset of village taxes per household, and of elections (competitive or not) of village heads, using Blundell-Bond’s 1998 method to address issues of weakly exogenous errors and highly persistent variables (such as population) in a dynamic panel. We find strong, robust empirical evidence supporting the predictions of our theory.

• “ Instability and the Incentives for Corruption”
  (with Filipe R. Campante and Davin Chor, Harvard University), August 2007, revision invited by Economics and Politics.

Abstract: We investigate the relationship between corruption and political stability, from both theoretical and empirical perspectives. We propose a model of incumbent behavior that features the interplay of two effects: A horizon effect, whereby greater instability leads the incumbent to embezzle more during his short window of opportunity; and a demand effect, by which the private sector is more willing to bribe stable incumbents. The horizon effect dominates at low levels of stability, since firms are unwilling to pay high bribes and unstable incumbents have strong incentives to embezzle, whereas the demand effect gains salience in more stable regimes. Together, these two effects generate a non-monotonic, U-shaped relationship between total corruption and stability. On the empirical side, we find a robust U-shaped pattern between country indices of corruption perception and various measures of incumbent stability, including historically-observed average tenures and the legislative majority of the chief executive: Regimes that are very stable or very unstable display higher levels of corruption when compared to those in an intermediate range of stability.

• “ Directed Altruism and Enforced Reciprocity in Social Networks: How Much is A Friend Worth?”  
  (with Stephen Leider, Markus M. Mobius and Tanya S. Rosenblat, Harvard University and Wesleyan University, NBER Working Paper No. 13135), May 2007, revision invited by the Quarterly Journal of Economics.

Abstract: We conduct field experiments in a large real-world social network to examine why decision makers treat friends more generously than strangers. Subjects are asked to divide surplus between themselves and named partners at various social distances, where only one of the decisions is implemented. In order to separate altruistic and future interaction motives, we implement an anonymous treatment where neither player is told at the end of the experiment which decision was selected for payment and a non-anonymous treatment where both players are told. Moreover, we include both games where transfers increase and decrease social surplus to distinguish between different future interaction channels including signaling one's generosity and enforced reciprocity, where the decision maker treats the partner to a favor because she can expect it to be repaid in the future. We can decompose altruistic preferences into baseline altruism towards any partner and directed altruism towards friends. Decision makers vary widely in their baseline altruism, but pass at least 50 percent more surplus to friends compared to strangers when decision making is anonymous. Under non-anonymity, transfers to friends increase by an extra 24 percent relative to strangers, but only in games where transfers increase social surplus. This effect increases with density of the network structure between both players, but does not depend on the average amount of time spent together each week. Our findings are well explained by enforced reciprocity, but not by signaling or preference-based reciprocity. We also find that partners' expectations are well calibrated to directed altruism, but that they ignore decision makers' baseline altruism. Partners with high baseline altruism have friends with higher baseline altruism and are therefore treated better.