Stanford University

Economic Affairs

In Draghi We Trust: The Euro Crisis, Social Unrest and the European Central Bank

-

The 2008 global financial crisis came with fears - and, for some, hopes of a new wave of public mobilisation in industrialised countries. Large protests were particularly expected in the epicentre of the crisis, the European Union. Yet, the force with which social groups garnered their calls for strikes ebbed quickly away. Gerald Schneider provides new evidence for why this was the case. He claims that strikes, and particularly political strikes, are 'bad weather' phenomena and crises exacerbate them. In monetary unions, where currency adjustments are difficult, fiscal changes are not supported by easing monetary measures and should unchain social unrest unless supranational actors get involved. Schneider argues that the political actions of the European Central Bank (ECB) have countered the potential for strikes in the Eurozone. He provides evidence for his theory with yearly panel data and a new original data  set of monthly strikes between 2001 and 2013. His analyses support the thesis that the EU institution was successful at attenuating social indignation over the Eurocrisis and its political fallout.

This paper is based on co-authored work with Dr. Federica Genovese (Essex) and Pia Wassmann (Hannover).

Professor Gerald Schneider, University of Konstanz

Gerald Schneider is Professor of International Politics and Executive Editor of “European Union Politics”. His main areas of research are European Union decision making, the causes and consequences of armed violence, the international political economy of financial markets, bargaining and conflict management.

Schneider defended his doctoral thesis at the University of Zurich in 1991, worked as post-doc at the University of Michigan (Ann Arbor) for two years and was an assistant professor (1992 – 1995) at the Institut universitaire de hautes études internationales in Geneva. Before joining the faculty at Konstanz in 1997, he was a Professor of Political Science at the University of Stuttgart (1996-1997) and Program Director at the University of Berne (1994 – 1997). Gerald Schneider has also been visiting scholar at Università Bocconi (Visiting Research Professor), Charles University Prague, Harvard University, University of Kobe, Sciences Po Paris (Grosser Chair) and Università Siena. He has published around 150 articles in various journals and volumes. Schneider is President of the European Political Science Association (2013-2015) and was also in 2003-2004 Vice President of the International Studies Association, and served as Program Chair for the 50th annual convention in New York City in 2009. Schneider has acted as a consultant and referee for various organizations, including the World Bank and the U.S. National Science Foundation. He has served for various selection committees of the the Alexander von Humboldt Foundation since 2007 and was a member of the scientific board of the Swiss Network of International Studies (2008-2013). Besides his native German, Schneider speaks English, French and survives in Italian and Danish.

The Eurotower Strikes Back: Crises, Adjustments and Europe's Austerity Protests
Download pdf

CISAC Central Conference Room
Encina Hall, 2nd floor
 

Gerald Schneider Professor of International Politics Speaker Universität Konstanz, Germany
Seminars
European Governance Seminar Series
Europe and the Global Economy Seminar Series

The Contemporary

This project examines the  “contemporary” with a focus on defining moments such as: 1945, 1973, 1989, and 2001. In recent years the concept of the contemporary has been taken up within limited disciplinary discourses and in the context of distinct geographical settings. The horizon of this project, however, is the global. We employ a comparative and interdisciplinary approach to the hybrid term “contemporary” as it intersects various fields and serves as a heuristic device to understand phenomena in politics, culture, and the arts.

European immigrants to America in early 20th century assimilated successfully, Stanford economist says

News Type
News
Date
Paragraphs

In the late 19th and early 20th centuries, an "open borders" United States absorbed millions of European immigrants in one of the largest mass migrations ever. New research by Stanford economist Ran Abramitzky challenges the perception that immigrants lagged behind native-born Americans in job pay and career growth.
 

BY CLIFTON B. PARKER

European immigrants to America during the country's largest migration wave in the late 19th and early 20th centuries had earnings comparable to native-born Americans, contrary to the popular perception, according to new Stanford research.

"Our paper challenges conventional wisdom and prior research about immigrant assimilation during this period," said Ran Abramitzky, an associate professor of economics at Stanford, faculty affiliate of The Europe Center and author of the research paper in the Journal of Political Economy.

New research challenges conventional wisdom about immigrant assimilation during the bygone era of open borders and mass migration.
Photo Credit: Lewis Hine/Library of Congress
New research challenges conventional wisdom about immigrant assimilation during the bygone era of open borders and mass migration.

Abramitzky and his colleagues found the average immigrant in that period did not face a substantial "earnings penalty" – lower pay than native-born workers – upon their arrival.

"The initial earnings penalty is overstated," said Abramitzky.

He said the conventional view is that the average European immigrants held substantially lower-paying jobs than native-born Americans upon first arrival and caught up with natives' earnings after spending some time in the United States. But that perception does not hold up to the facts, he said.

Abramitzky's co-authors include Leah Platt Boustan from the University of California, Los Angeles, and Katherine Eriksson from California Polytechnic State University.

The researchers examined records on 21,000 natives and immigrants from 16 European countries in U.S. Census Bureau data from 1900 to 1910 to 1920.

"Even when U.S. borders were open, the average immigrant who ended up settling in the United States over the long term held occupations that commanded pay similar to that of U.S. natives upon first arrival," Abramitzky said.

In that bygone era of "open borders," Abramitzky said, native-born Americans were concerned that immigrants were not assimilating properly into society – yet, on the whole, this concern appears to be unfounded. "Such concerns are echoed in today's debate over immigration policy," he added.

At the same time, Abramitzky said that immigrants from poorer countries started out with lower paid occupations relative to natives and did not manage to close this gap over time.

"This pattern casts doubt on the conventional view that, in the past, immigrants who arrived with few skills were able to invest in themselves and succeed in the U.S. economy within a single generation," Abramitzky and his colleagues wrote.

Age of migration

America took in more than 30 million immigrants during the Age of Mass Migration (1850-1913), a period when the country had open borders. By 1910, 22 percent of the U.S. labor force – and 38 percent of workers in non-southern cities – was foreign-born (compared with 17 percent today).

As the research showed, immigrants then were more likely than natives to settle in states with a high-paying mix of occupations. Location choice was an important strategy they used to achieve occupational parity with native-born Americans.

"This Age of Mass Migration not only is of interest in itself, as one of the largest migration waves in modern history, but also is informative about the process of immigrant assimilation in a world without migration restrictions," Abramitzky said.

Over time, many of the immigrants came from the poorer regions of southern and eastern Europe.

Abramitzky pointed out that native-born Americans in the late 19th and early 20th centuries were concerned about poverty in immigrant neighborhoods and low levels of education among children, many of whom left school early to work in industry.

Consequently, American political progressives championed a series of reforms, including U.S. child labor laws and compulsory schooling requirements.

Still, some natives believed that new arrivals would never fit into American society. And so, in 1924, Congress set a strict quota of 150,000 immigrant arrivals per year, with more slots allocated to immigrants from northern and western European countries than those from southern and eastern Europe.

But those early-20th-century fears of unassimilated immigrants were baseless, according to Abramitzky.

"Our results indicate that these concerns were unfounded: The average long-term immigrants in this era arrived with skills similar to those of natives and experienced identical rates of occupational upgrading over their life cycle," he wrote.

How does this lesson apply to today's immigration policy discussion? Should the numbers of immigrants and their countries of origin be limited and those with higher skills be given more entry slots?

Abramitzky said stereotyping immigrants has affected the political nature of the contemporary debate.

"These successful outcomes suggest that migration restrictions are not always necessary to ensure strong migrants' performance in the labor market," he said.

Hero Image
Image of "First sight of New York Bay -- arrival of a European steamer" by James Wells Champney
First sight of New York Bay--arrival of a European steamer.
James Wells Champney/New York Public Library
All News button
1
Date Label

Jens Hainmueller

616 Serra Street
Encina Hall West, Room 440
Stanford, CA 94305-6044

0
Kimberly Glenn Professor of Political Science
Professor, by courtesy, of Political Economy
101105_jenshainmueller_1583.jpg

Jens Hainmueller's research has appeared in journals such as the American Political Science Review, American Journal of Political Science, Journal of the American Statistical Association, Review of Economics and Statistics, Political Analysis, International Organization, and the Journal of Statistical Software, and has received awards from the American Political Science Association, the Society of Political Methodology, the Midwest Political Science Association.

Hainmueller received his PhD from Harvard University and also studied at the London School of Economics, Brown University, and the University of Tübingen. Before joining Stanford, he served on the faculty of the Massachusetts Institute of Technology.

Affiliated faculty at The Europe Center
Hide publication sections
Off

Religion, Division of Labour and Conflict: Anti-Semitism in German Regions over 700 Years

-

The paper that will be presented at this seminar, “Religion, Division of Labour and Conflict: Anti-Semitism in German Regions over 700 Years,” is co-authored by Luigi Pascali.

Part of the Economic History Seminar Series, co-sponsored by The Europe Center.

Landau Economics Building, Room 351

Sascha Becker Professor of Economics and deputy director of the ESRC Centre for Competitive Advantage in the Global Economy (CAGE) Speaker University of Warwick, UK
Seminars

**CANCELLED** Seminar with Fabian Waldinger

-

Part of the Economic History Seminar Series, co-sponsored by The Europe Center.

Fabian Waldinger Associate Professor of Economics Speaker University of Warwick, UK
Seminars

A Vision of the Growth Process in a Technologically progressive Economy: the United States, 1899-1941

-

Nicholas Craft will present new estimates of TFP growth at the sectoral level and an account of sectoral contributions to overall productivity growth, from his paper co-authored by Gerben Bakker (London School of Economics) and Pieter Woltjer (Wageningen University).  They improve on Kendrick (1961) in several ways including expanding the coverage of sectors, extending estimates to 1941, and better accounting for labor quality.  The results have important implications including that the pattern of productivity growth was generally ‘yeasty’ rather than ‘mushroomy’, that the 1930s did not experience the fastest TFP growth of the 20th century, and that the role of electricity as a general purpose technology does not explain the ‘yeastiness’ of manufacturing in the 1920s.

The link for a PDF copy of the paper may be found below.

Part of the Economic History Seminar Series, co-sponsored by The Europe Center.

Paper: A Vision of the Growth Process in a Technologically progressive Economy: the United States, 1899-1941
Download pdf

Landau Economics Building, Room 351

Nicholas Crafts Professor of Economics and director of the ESRC Centre for Competitive Advantage in the Global Economy (CAGE) Speaker University of Warwick, UK
Seminars

European Union can overcome extremism vote, Stanford faculty say

News Type
News
Date
Paragraphs

Appeared in Stanford Report, May 29, 2014

By Clifton B. Parker

The electoral eruption of anti-European Union populism is a reflection of structural flaws in that body but does not represent a fatal political blow, according to Stanford scholars.

In the May 25 elections for the European Parliament, anti-immigration parties won 140 of the 751 seats, well short of control, but enough to rattle supporters of the EU, which has 28 member nations. In Britain, Denmark, France and Greece, the political fringe vote totals stunned the political establishments.

Stanford political scientist Francis Fukuyama said the rise of extremism and anti-elitism is not surprising in the wake of the 2008 economic downturn and subsequent high levels of unemployment throughout Europe. In one sense, the EU elites have themselves to blame, he said.

"The elites who designed the EU and the eurozone failed in a major way," he said. "There was a structural flaw in the design of the euro (monetary union absent fiscal union, and the method of disciplining countries once in the zone)," said Fukuyama, the Olivier Nomellini Senior Fellow at Stanford's Freeman Spogli Institute for International Studies and the Center for Democracy, Development and the Rule of Law, and Research Afflilate at The Europe Center.

Some have argued that the European Union should adopt a form of fiscal union because without one, decisions about taxes and spending remain at the national level.

As Fukuyama points out, this becomes a problem, as in the case of a debt-ridden Greece, which he believes should not have qualified for EU membership in the first place. In fact, he said, it would have been better for Greece itself to leave the euro at the outset of the 2008 crisis.

Still, Fukuyama said the big picture behind the recent election is clear – it was a confluence of issues and timing.

"It is a bit like an off-year election in the U.S., where activists are more likely to vote than ordinary citizens," he said.

Fukuyama believes the EU will survive this electoral crisis. "I think the EU will be resilient. It has weathered other rejections in the past. The costs of really exiting the EU are too high in the end, and the elites will adjust, having been given this message," he said.

Meanwhile, the populist parties in the different countries are not unified or intent on building coalitions with each other.

"Other than being anti-EU, most of them have little in common," Fukuyama said. "They differ with regard to specific positions on immigration, economic policy, and they respond to different social bases."

Ongoing anger

Dan Edelstein, a professor of French, said the largest factor for success by extremist candidates was "ongoing anger toward the austerity policy imposed by the EU," primarily by Germany.

Edelstein estimates that a large majority of French voters are still generally supportive of the EU. For the time being, the anti-EU faction does not have a majority, though they now have much more representation in the European Parliament.

Edelstein noted existing strains among the anti-EU parties – for example, the UK Independence Party in Britain has stated that it would not form an alliance with the National Front party in France.

Immigration remains a thorny issue for some Europeans, Edelstein said.

"'Immigration' in most European political debates, tends to be a synonym for 'Islam.' While there are some countries, such as Britain, that are primarily worried about the economic costs of immigration, in most continental European countries, the fears are cultural," he said.

As Edelstein put it, Muslims are perceived as a "demographic threat" to white or Christian Europe. However, he is optimistic in the long run.

"It seems a little early to be writing the obituary of the EU. Should economic conditions improve over the next few years, as they are predicted to, we will likely see this high-water mark of populist anger recede," said Edelstein.

Cécile Alduy, an associate professor of French, writes in the May 28 issue of The Nation about how the ultra-right-wing National Front came in first place in France's election.

"This outcome was also the logical conclusion of a string of political betrayals, scandals and mismanagement that were only compounded by the persistent economic and social morass that has plunged France into perpetual gloom," she wrote.

Historian J.P. Daughton said that like elsewhere in the world, immigration often becomes a contentious issue in Europe in times of economic difficulties.  

"High unemployment and painful austerity measures in many parts of Europe have led extremist parties to blame immigrants for taking jobs and sapping already limited social programs," he said.

Anti-immigration rhetoric plays particularly well in EU elections, Daughton said. "Extremist parties portray European integration as a threat not only to national sovereignty, but also to national identity.

Edelstein, Alduy and Daughton are all Faculty Affiliates of The Europe Center.

Wake-up call

Russell A. Berman, a professor of German studies and comparative literature, said many Europeans perceive the EU as "somehow impenetrable, far from the civic politics of the nation states."

As a result, people resent regulations issued by an "intangible bureaucracy," and have come to believe that the European Parliament has not grappled with major issues such as mustering a coherent foreign policy voice, he said.

"The EU can be great on details but pretty weak on the big picture," said Berman, who is the Walter A. Haas Professor in the Humanities, Senior Fellow at the Hoover Institution, and Faculty Affiliate of The Europe Center. "It is this discrepancy that feeds the dissatisfaction."

Yet he points out that the extremist vote surged in only 14 nations of the EU – in the other 14, there was "negligible extremism," as he describes it.

"We're a long way from talking about a fatal blow, but the vote is indeed a wake-up call to the centrists that they have to make a better case for Europe," Berman said.

Hero Image
A man walks past a board displaying provisional results of the European Parliament election at the EU Parliament in Brussels
A man walks past a board displaying provisional results of the European Parliament election at the EU Parliament in Brussels May 25, 2014.
REUTERS / Francois Lenoir
All News button
1

Scottish independence vote is 'identity crisis' for the UK, Stanford faculty say

News Type
News
Date
Paragraphs

Appeared in Stanford Report, June 9, 2014

By Clifton B. Parker

A new chapter in the Scottish independence movement could reshape the future of that country and the rest of the United Kingdom, Stanford faculty say.

Scotland will hold an election on Sept. 18 to decide whether it should break away from the United Kingdom. With the official kickoff of the Scottish independence referendum on May 30, the 4.1 million Scots who make up the country's electorate are mulling over how independence would affect a range of issues including agriculture, education, defense, health care and more.

Now, momentum seems to be on the side of the independence vote, said Christophe Crombez, a consulting professor in Stanford's Europe Center in the Freeman Spogli Institute for International Studies.

"If you had asked me a year ago whether Scotland would vote for independence, I would have said no. Now I am not so sure. The current UK government has not handled this issue well. Threats, such as warnings that Scotland could not keep the pound, have backfired," said Crombez.

Economics and the EU

Scotland, which has significant – though somewhat dwindling – oil operations in the North Sea, would likely remain part of the European Union if it leaves the UK, Crombez said. Scotland highly favors membership, whereas Britain's view is more mixed about the 28-member bloc.

"The economic consequences of leaving the UK will be minimal for Scotland. Scotland would remain part of the EU single market. It could possibly keep more of its oil revenues," he said.

The political ramifications for a redrawn Great Britain are significant. "Great Britain would lose more of its prominent status in world politics. England would have to deal with an identity crisis, having lost its empire after World War II and now witnessing the unraveling of the UK," he said.

Extracting Scotland from the Great Britain political equation would likely give more power to conservative British voters, as Scotland tends to vote on the left side, Crombez said.

"Also, the British government wants to put the issue behind them. So when the vote goes down, they can finally move on one way or another from the Scottish independence issue," he said.

If Scottish voters elect to remain part of the United Kingdom, the British government has said Scotland will not get another chance at independence.

Historical origins

The current move toward independence stems from the 1980s, when Margaret Thatcher was Britain's prime minister.

"Thatcher's policies were intensely disliked in Scotland," Crombez said. "While she kept on winning elections in England, her party's support in Scotland dwindled. Scotland felt that England was imposing policies on it that it did not want. Devolution and independence were seen as ways to get out of that situation."

As a result, since the early 1990s the conservatives have not played a significant role in Scottish politics, he said. And in 1997, voters in Scotland approved "devolution," which granted them legislative powers in the form of the Scottish Parliament.

"In my opinion, calls for independence would have been even stronger if Scotland had not been granted the autonomy it got in the 1990s," he said.

The roots of Scotland's drive for independence stretch deep into Great Britain's past, said Priya Satia, associate professor of modern British history and Europe Center faculty affiliate.

According to Satia, "Some might say as far back as the Jacobite rebellion against the union of Scotland with England and Wales in 1707. Others might point to a much later originary moment – regional nationalisms like Scotland's emerged in the latter half of the 20th century as part of the British reaction to the loss of empire."

From 1603, Scotland and England shared the same monarch when James VI of Scotland was declared King of England and Ireland as well. The two kingdoms united in 1707 to form the Kingdom of Great Britain. Prior to this, Scotland had been a sovereign state for more than 800 years.

Scotland, Wales, England and Ireland lost that sense of "common identity" to a shared British brotherhood once the "colonial 'other'" no longer existed in the post-WWII period, said Satia.

Historian Peter Stansky says it would not be wise for Scotland to exit the UK.

"I think it would probably be a mistake for Scotland to vote for independence. At the moment I think it has a good situation," said Stansky, the Frances and Charles Field Professor of History, Emeritus.

Stansky noted, "It can act independently in some areas, participate in some British decisions and has English backup. Independence would be a nice sentimental gesture, but a bad move."

Hero Image
Britain's Prime Minister tours the Walcheren Barracks in Glasgow, Scotland
Britain's Prime Minister tours the Walcheren Barracks in Glasgow, Scotland May 15, 2014. Cameron urged Scots on Thursday to stay in the United Kingdom during an unusual two-day visit to Scotland to counter a rise in support for secession in opinion polls and criticism of the anti-independence campaign.
REUTERS/Russell Cheyne
All News button
1

Journal Article: "Preferences for International Redistribution: The Divide over the Eurozone Bailouts," written by Michael Bechtel, Jens Hainmueller and Yotam Margalit

News Type
News
Date
Paragraphs

This paper written by political scientists Michael Bechtel, Jens Hainmueller and Yotam Margalit, is the first systematic analysis of the question of why European Union voters agree to bear the costs of bailing out other countries.

Jens Hainmueller is an Associate Professor of Political Science at Stanford and a Europe Center Faculty Affiliate.

For a more information, please visit the publication's webpage by clicking on the article title below.

All News button
1
Subscribe to Economic Affairs