The long shadow of history? the impact of colonial labor institutions on economic development in Peru

We examine a canonical case of forced labor: the mita and the encomienda in colonial Peru. The mita was a labor draft designed to provide workers for mines, churches, and public works in colonial Peru and Bolivia. The encomienda granted a select group of Spanish settlers the right to extract labor and tribute from indigenous peoples. We examine the impact of forced labor using a dataset of 500 indigenous settlements scattered across modern-day Peru. We find that forced labor gravely impacted the Peruvian communities subjected to it, but the effects nearly dissipated before the end of the colonial period (1532-1811). We test for a possible “reversal of fortune” in the postcolonial period by looking at an array of variables for the 19th to the 21st centuries (literacy, access to land, road density, and luminosity) and find no significant differences. The results hold when we examine the mita and encomienda separately. The mechanisms that caused its impact to fade were migration, growing outside options for indigenous labor, and opposition from the Crown and new Spanish settlers who lacked access to forced labor.