Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
International Development
L. Pascali
University of Warwick
July 2016
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Acemoglu, Johnson and Robinson, AER 2001
Does the risk of expropriation (institutions) partially account
for di¤erences in incomes of countries that were colonized by
Europeans?
The question is interesting because it is argued that these
countries had similar GDPpc 400 years ago, but their wealth
widely varying today.
OLS regression cannot help answer the question, because even
if a positive correlation between GDPpc and institutional
proxies were found the causality cannot be established .
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Acemoglu, Johnson and Robinson, AER 2001
Source of variation in the institutions of former colonies
High mortality for European settlers leads to less settlements
and to worse institutions.
To the extent that institutions persist, this also implies worse
institutions in those places today.
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Acemoglu, Johnson and Robinson, AER 2001
Estimate the following equation:
where:
Yi = β0 + β1 Xbi + εi
Yi is per-capita income
Xi is the protection against expropriation measure taken from
International Country Risk Guide.
First stage:
Xi = α0 + α1 Mi + µi
where Mi is the settlers mortality
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Acemoglu, Johnson and Robinson, AER 2001
First stage
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Acemoglu, Johnson and Robinson, AER 2001
First stage
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Acemoglu, Johnson and Robinson, AER 2001
Second stage
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Acemoglu, Johnson and Robinson, AER 2001
Second stage
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Acemoglu, Johnson and Robinson, AER 2001
No reverse causality, mortality rates refer to two centuries ago
Is the exclusion restriction of the 2SLS valid?
Conditional on the controls included in the regression, the
mortality rates of European settlers more than hundred years
ago had no a¤ect on pcGDP other than their e¤ect through
institutional development. . .
Plausible. Yellow fever, malaria and gastrointestinal diseases
a¤ecting Europeans had much less e¤ect on native
inhabitants, who had genetic and acquired immunity
If kids survive, they get immunity
Mortality rates of local troops - very similar in di¤erent
regions despite very large di¤erences in European mortality
rates otherwise, a direct e¤ect on human capital and incomes
AJR show that climate is not collinear with disease
environment
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Acemoglu, Johnson and Robinson, AER 2001
Check validity further by controlling for potential sources of
direct e¤ect:
latitude, measures of geography, current prevalence of malaria
and life expectancy
Use only variation due to yellow fever, which is now mostly
eradicated, thus, less likely to have direct e¤ect.
These checks all support the validity of the approach
Note not estimating the causal e¤ect of being colonized vs.
not colonized (!!!)
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Acemoglu, Johnson and Robinson, AER 2001
Very large causal e¤ects of institutions on long-run growth
Di¤erences in institutions account for over 34 of the variation
in income per capita today (long-run e¤ect)
The estimate implies the 2.24 di¤erences in expropriation risk
between Nigeria and Chile translates into 7 fold di¤erence in
income. . . In practice, Chile is over 11 times as rich as Nigeria
Additional Results: Countries with worse institutions because
of historical reasons su¤er (AJR, follow-up papers. . . )
More volatile output growth.
Bigger crises.
Lower growth.
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Melissa Dell, Econometrica, 2010
It examines the long-run impacts of the mita mining, an
extensive forced mining system in Peru and Bolivia between
1573 and 1812, on development today
Regression Discontinuity Design
The Mita boundary provides a nice experimental design.
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Historical Background
The Potosi mines, discovered in 1545, contained the largest
deposits of silver in the Spanish Empire
The Huancavelica mines provided the mercury necessary to
re…ne silver ore
Beginning from 1573, indigenous villages located within a
certain region were required to provide one-seventh of their
adult male population as rotating mita laborers to Potosi or
Huancavelica.
Local native elites were responsible of collecting conscripts.
With silver deposits depleted, the mita was abolished in 1812.
Two criteria used to assign the Mita: distance to mines and
elevation
Acemoglu, Johnson and Robinson, AER 2001
Historical Background
Dell, Econometrica, 2010
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Main Data
The unit of observation is either the household or the district
(Peru)
Measures of standard of living:
household consumption data (INEI)
heights of all 6- to 9-year-old children (Ministry of Education)
Stunting is related to malnutrition
Land tenures, Education, Roads, Sectoral composition
Soil: elevation, slope etc.
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Estimation Framework
Regression discontinuity design
cidb = α1 Mitad + X 0 α + εidb
where:
cidb is the outcome of interest for observation i in district d
along segment b of the mita boundary
Mitad is a dummy equal to one if district d contributed to the
Mita
X is a set of controls
Identifying assumptions:
All relevant factors besides the treatment vary smoothly at the
mita boundary
No selective sorting across the treatment threshold.
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Estimation Framework
Close to the border, there are no large di¤erences in the
characteristics of the soil and % of indigenous.
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Main Results
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Main Results
Long-run Mita e¤ect lowers household consumption in 2001
by around 25% in subjected districts
Point estimates of the Mita e¤ect on stunting range from
0.055 to 0.114 percentage points
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Main Results
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Channels of persistence
Melissa Dells focuses on three channels of persistence:
Land tenure
Public Goods
Sectoral composition
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Land Tenure
This part examines the impact of the mita on the formation of
the haciendas (rural estates with an attached labor force)
In 1573, a landed elite had not yet formed. Peru was parcelled
into encomiendas (territories to which Spaniards exercises the
right to collect tributes and labor services from indigenous
population)
Rivalries between encomenderos provoked several civil wars
and, around the 1570s, the Spanish crown began to dismantle
the encomienda system.
Spanish land tenure policy after this aimed to minimize the
establishment of landed elites in mita districts as large
landowners opposed yielding their attached labor to the Mita
service
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Land Tenure
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Land Tenure
The results show a very large mita e¤ect of the number and
concentration of haciendas in the 17th century.
In 1969, the Peruvian government enacted an agrarian reform
bill mandating the complete dissolution of haciendas. The
haciendas were divided into individuals and indigenous
communities
Therefore, it is not surprising that the Mita system led to
higher levels of inequality today.
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Public Good
There is evidence in the paper that the mita:
lowered access to education historically
had large impacts on the quality of regional roads
Dell hypothesizes that the long-term presence of large
landowners provided a stable land tenure system that
encouraged public good provision.
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Sectoral composition
The long-run mita impact increases the prevalence of
subsistence agriculture
Acemoglu, Johnson and Robinson, AER 2001
Dell, Econometrica, 2010
Introduction
To sum up:
A Mita e¤ect lowers household consumption by around 25%
and increases the prevalence of stunted growth in children by
around 6%
The Mita’s in‡uence has persisted until today through its
impact on land tenure and public good provision
Mita districts historically had fewer large landowners and lower
education attainment. Today they are less integrated into road
networks and their residents are substantially more likely to be
subsistence farmers.