DP16447 Pandemic Shock and Economic Divergence: Political Economy Before and After the Black Death

Author(s): Luis Bosshart, Jeremiah Dittmar
Publication Date: August 2021
Keyword(s): Cities, growth, institutions, political economy, structural change
JEL(s): N13, N14, N60, N93, O10, O18, O40, O43, P48
Programme Areas: Economic History, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16447

We document how the Black Death activated politics and led to economic divergence within Europe. Before the pandemic, economic development was similar in Eastern and Western German cities despite greater political fragmentation in the West. The pandemic precipitated a divergence that coincided with prior differences in politics. After the pandemic, construction and manufacturing fell by 1/3 in the East relative to underlying trends and the Western path. Politics institutionalizing local self-government advanced in the West, but not in the East. This divergence is observed across otherwise similar cities along historic borders and foreshadows a subsequent divergence in agriculture.