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Long Term Persistence

Author

Listed:
  • Luigi Guiso

    (European University Institute, EIEF and CEPR)

  • Paola Sapienza

    (Northwestern University, NBER and CEPR)

  • Luigi Zingales

    (University of Chicago, NBER and CEPR)

Abstract

Is social capital long lasting? Does it affect long term economic performance? To answer these questions we test Putnam’s conjecture that today marked differences in social capital between the North and South of Italy are due to the culture of independence fostered by the free city states experience in the North of Italy at the turn of the first millennium. We show that the medieval experience of independence has an impact on social capital within the North, even when we instrument for the probability of becoming a city state with historical factors (such as the Etruscan origin of the city and the presence of a bishop in year 1,000). More importantly, we show that the difference in social capital between towns that in the Middle Ages had the characteristics to become independent and towns that did not exists only in the North (where most of these towns did become independent) and not in the South (where the power of the Norman kingdom prevented them from doing so). Our difference in difference estimates suggest that at least 50% of the North-South gap in social capital is due to the lack of a free city state experience in the South.

Suggested Citation

  • Luigi Guiso & Paola Sapienza & Luigi Zingales, 2008. "Long Term Persistence," EIEF Working Papers Series 0810, Einaudi Institute for Economics and Finance (EIEF), revised Aug 2008.
  • Handle: RePEc:eie:wpaper:0810
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    References listed on IDEAS

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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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