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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 self determination. To isolate the exogenous variation in culture, we rely on two historical variables used as instruments: the literacy rate at the end of the 19th 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. (JEL: O10, F10, P10, N13) (c) 2010 by the European Economic Association.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 321307000000000974.

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Date of creation: 05 Apr 2007
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Handle: RePEc:cla:levarc:321307000000000974

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  1. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," NBER Working Papers 9305, National Bureau of Economic Research, Inc.
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  5. M. Rabin, 2001. "Incorporating Fairness into Game Theory and Economics," Levine's Working Paper Archive 511, David K. Levine.
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  8. Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 3-39, January.
  9. Daron Acemoglu & Simon Johnson, 2005. "Unbundling Institutions," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 949-995, October.
  10. Acemoglu, Daron & Johnson, Simon & Robinson, James A, 2003. "The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth," CEPR Discussion Papers 3712, C.E.P.R. Discussion Papers.
  11. Arvind Subramanian & Shanker Satyanath, 2004. "What Determines Long-Run Macroeconomic Stability? Democratic Institutions," IMF Working Papers 04/215, International Monetary Fund.
  12. Sjoerd Beugelsdijk & Ton Van Schaik, 2003. "Social capital and regional economic growth," ERSA conference papers ersa03p518, European Regional Science Association.
  13. Robert J. Barro & Rachel McCleary, 2003. "Religion and Economic Growth," NBER Working Papers 9682, National Bureau of Economic Research, Inc.
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  15. 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.
  16. repec:rus:hseeco:72137 is not listed on IDEAS
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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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