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Bohemians, Human Capital, and Regional Economic Growth

  • Oliver Falck

    ()

    (Ifo Institute for Economic Research, Munich.)

  • Michael Fritsch

    ()

    (University of Jena, School of Economics and Business Administration, and Max Planck Institute of Economics, and German Institute for Economic Research (DIW))

  • Stephan Heblich

    ()

    (Max Planck Institute of Economics, Jena; Entrepreneurship, Growth, and Public Policy Group)

An emerging literature on the geography of bohemians argues that a region's lifestyle and cultural amenities explain, at least partly, the unequal distribution of highly qualified people across space, which in turn, explains geographic disparities in economic growth. However, to date, there has been little or no empirical attempt to identify a causal relation. To identify the causal impact of bohemians on economic growth, we apply an instrumental variable approach using as an exogenous instrument the geographic distribution of bohemians prior to the Industrial Revolution in Germany. This distribution was primary the result of competition for prestige between courts and not of economic prosperity. Accordingly, the instrument is independent of today's regional economic development. Focusing on the concentration of highly skilled people today that is explained by the proximity to exogenous concentrations of bohemians, the observed local average treatment effect supports the hypothesis of a positive impact of bohemians on regional economic development.

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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2009-049.

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Date of creation: 06 Jul 2009
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Handle: RePEc:jrp:jrpwrp:2009-049
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