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Culture and institutions: economic development in the regions of Europe

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  • Guido Tabellini

Abstract

Does culture have a causal effect on economic development? The data on European regions suggest that it does. Culture is measured by indicators of individual values and beliefs, such as trust and respect for others, and confidence in individual selfdetermination. To isolate the exogenous variation in culture, I rely on two historical variables used as instruments: the literacy rate at the end of the XIXth century, and the political institutions in place over the past several centuries. The political and social history of Europe provides a rich source of variation in these two variables at a regional level. The exogenous component of culture due to history is strongly correlated with current regional economic development, after controlling for contemporaneous education, urbanization rates around 1850 and national effects. Moreover, the data do not reject the over-identifying assumption that the two historical variables used as instruments only influence regional development through culture. The indicators of culture used in this paper are also strongly correlated with economic development and with available measures of institutions in a cross-country setting.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 321307000000000466.

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Date of creation: 07 Oct 2006
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Handle: RePEc:cla:levarc:321307000000000466

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  1. Arvind Subramanian & Shanker Satyanath, 2004. "What Determines Long-Run Macroeconomic Stability? Democratic Institutions," IMF Working Papers 04/215, International Monetary Fund.
  2. Daron Acemoglu & Simon Johnson & James Robinson & Yunyong Thaicharoen, 2002. "Institutional Causes, Macroeconomic Symptoms: Volatility, Crises and Growth," NBER Working Papers 9124, National Bureau of Economic Research, Inc.
  3. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
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  5. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
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  8. repec:rus:hseeco:72137 is not listed on IDEAS
  9. Acemoglu, Daron & Johnson, Simon H. & Robinson, James A., 2003. "The Rise of Europe: Atlantic Trade, Institutioanl Change and Economic Growth," Working papers 4269-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
  10. Beugelsdijk, S. & Schaik, A.B.T.M. van, 2001. "Social Capital and Regional Economic Growth," Discussion Paper 2001-102, Tilburg University, Center for Economic Research.
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  12. Bornhorst, Fabian & Ichino, Andrea & Schlag, Karl & Winter, Eyal, 2004. "Trust and Trustworthiness Among Europeans: South-North Comparison," CEPR Discussion Papers 4378, C.E.P.R. Discussion Papers.
  13. Raquel Fernandez & Alessandra Fogli & Claudia Olivetti, 2002. "Marrying Your Mom: Preference Transmission and Women's Labor and Education Choices," NBER Working Papers 9234, National Bureau of Economic Research, Inc.
  14. Robert J. Barro & Rachel McCleary, 2003. "Religion and Economic Growth," NBER Working Papers 9682, National Bureau of Economic Research, Inc.
  15. Raquel Fernandez & Alessandra Fogli & Claudia Olivetti, 2004. "Preference Formation and the Rise of Women's Labor Force Participation: Evidence from WWII," NBER Working Papers 10589, National Bureau of Economic Research, Inc.
  16. Daron Acemoglu & Simon Johnson, 2003. "Unbundling Institutions," NBER Working Papers 9934, National Bureau of Economic Research, Inc.
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  1. Are Economic Values Transmitted from Parents to Children?
    by Blog Author in Liberty Street Economics on 2014-01-06 12:00:00
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