Working Paper: NBER ID: w31758
Authors: Richard Hornbeck; Trevon Logan
Abstract: We re-characterize American slavery as inefficient, whereby emancipation generated substantial aggregate economic gains. Coercive labor markets were severely distorted, with the social marginal cost of labor substantially above its marginal benefit. Production during enslavement came at immense costs imposed upon enslaved people that reduced aggregate economic surplus, or the total value of output minus total costs incurred. The costs of enslavement are inherently difficult to quantify, which leads to a wide range of quantitative estimates, but we calculate that emancipation generated aggregate economic gains worth the equivalent of a 4% to 35% increase in US aggregate productivity (7 to 60 years of technological innovation). Emancipation decreased output but sparked dramatic aggregate economic gains by decreasing costs substantially more, illustrating the substantial potential for aggregate economic gains in the presence of severe misallocation.
Keywords: emancipation; aggregate economic gains; American slavery; economic efficiency
JEL Codes: J47; N31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Emancipation (J47) | U.S. aggregate productivity (O49) |
| Coercive labor markets during slavery (J47) | Misallocation of resources (D61) |
| Costs of enslavement (J47) | Aggregate economic surplus (D69) |
| Emancipation (J47) | Economic surplus (D69) |
| Emancipation (J47) | Input costs (D24) |
| Emancipation (J47) | Output (Y10) |
| Emancipation (J47) | Economic gains from emancipation (N00) |
| Emancipation (J47) | Labor misallocation correction (J89) |