Speaker: Treb Allen, Dartmouth College
Location: online or at Kiel Institute for the World Economy, Kiellinie 66, 24105 Kiel
Organizers: Kiel Institute for the World Economy, CEPR
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Abstract: We study the economic structure of U.S. slavery on the eve of the Civil War and quantify the welfare gains from emancipation. We consider three facets of the institution of slavery: first, enslaved persons were coerced into supplying more labor than they would have chosen; second, slaveholders acted like monopsonists when setting enslaved persons' consumption and labor; and third, slaveholders misallocated enslaved persons across occupations and locations to maximize output rather than utility. We develop a novel quantitative general equilibrium spatial model of slavery featuring each of these facets and use detailed spatial microdata to document a number of stylized facts consistent with the model predictions. We then combine the data with the framework to estimate how dismantling the institution of slavery affected the spatial economy. We find that the (equivalent variation) welfare gains from emancipation for enslaved persons exceeded 1,100%, with coercion (196%), monopsony (160%) and mis-allocation (56%) all contributing importantly to the gains. Emancipation also increased U.S. GDP (16.8%), although the welfare of free persons fell by 0.8%. Finally, we show that the counterfactual changes in labor allocations from emancipation is strongly correlated with observed patterns of population movements following the Civil War, although the actual reallocations are smaller than the model predicts.