The Institutional Economics of Elite Persistence: Strategies for Big Shocks

The transition from the Ming to Qing dynasty in 1644, marked by significant societal upheaval and transformation, presents economists with a remarkable natural experiment in institutional resilience and adaptation. When approximately 36 million people—16% of China's population—perished during this period, the resulting societal transformation created conditions that allow us to examine fundamental questions about institutional persistence and elite adaptation. Shiue and Keller (2024) leverage this historical moment through a sophisticated analysis of Tongcheng County, where the destruction of 75% of arable land by 1643 provides precise variation for examining mechanisms of institutional continuity.

The study's methodological innovation is a standout feature, as it constructs a unique five-generation panel (N=8,084) that integrates detailed genealogical records with outcomes from the civil service examination system (keju). This data architecture, tracking families across 83 distinct locations, enables the identification of both geographic and social mobility patterns. The researchers distinguish between 'treatment of people ' versus 'treatment of regions,' allowing for a nuanced understanding of how institutional effects persist across space and lineage. The treatment identification strategy exploits geographic variation in destruction intensity while controlling for pre-shock differences in elite status, creating a robust framework for causal inference.

The empirical findings reveal sophisticated adaptation mechanisms operating through multiple channels. Families in heavily affected regions initially experienced a 30% reduction in elite attainment, yet by the third generation, these lineages demonstrated increased success in the civil service examination system. This reversal operated through several distinct mechanisms: strategic human capital investment, optimization of family size (with a correlation coefficient of -0.26 between number of sons and elite attainment), and marriage alliances across 130 female birth clans. Geographic arbitrage played a crucial role, with selective outmigration from high-destruction areas generating a significant migration premium in elite attainment (β = 0.30).

Perhaps most intriguing is the study's revelation of intergenerational transmission mechanisms. These mechanisms, which include parent-child elite correlation in treated lines (ρ = 0.329), suggest strong persistence in human capital transmission, enhanced by face-time effects and maternal influence. This finding challenges conventional understanding of institutional change, implying that traumatic societal disruption may strengthen, rather than weaken, specific institutional arrangements through its effect on family-level adaptation strategies.

The theoretical implications extend well beyond the historical context. The research demonstrates how elite recapture of institutional power operates through the interaction of formal and informal institutions, with trauma-induced normative shifts playing a crucial role in reshaping family strategies. The sophisticated fixed effects specifications, controlling for generation-specific effects, birth year variations, and clan-level heterogeneity, provide robust evidence for these mechanisms. Moreover, the analysis of resource allocation efficiency reveals how families optimize between fertility and human capital investment under severe constraints, with geographic mobility serving as a risk mitigation strategy.

The study's contribution to institutional economics is significant, as it demonstrates path dependence in elite formation and the crucial role of social networks in maintaining institutional continuity. The interaction between geographic and social mobility emerges as a critical mechanism through which elites maintain their position despite systemic shock. This finding has significant implications for our understanding of institutional change and persistence in other contexts and underscores the study's academic significance.

This research opens several promising avenues for future investigation. Comparative institutional analysis across regions and periods could reveal variation in persistence mechanisms, while integration with other historical data sources might provide additional insights into economic outcome indicators. The methodology developed can help understand modern institutional adaptation to systemic shock, offering valuable insights into contemporary economics and policy-making.

In conclusion, Shiue and Keller's work significantly advances our understanding of institutional persistence through family-level adaptation mechanisms. Their sophisticated empirical strategy, combined with rich historical context, provides compelling evidence for the role of elite families in maintaining institutional continuity through systemic shock. The implications extend well beyond the specific historical context to inform our broader understanding of institutional economics.

Questions ??

1) How does the intensity of societal trauma determine the subsequent path of institutional evolution? ??

2) To what extent do modern meritocratic institutions serve as vehicles for elite persistence rather than social mobility? ??

3) How will elite adaptation strategies evolve as artificial intelligence and automation transform labor markets and social institutions? ??

Reference ??

Shiue, C. H., & Keller, W. (2024). Elite strategies for big shocks: The case of the fall of the Ming (Working Paper No. 33121). National Bureau of Economic Research. https://www.nber.org/papers/w33121