Institutions, Human Capital and Development

Daron Acemoglu, Francisco Gallego and James Robinson

No 19, Working Papers ClioLab from EH Clio Lab. Instituto de Economía. Pontificia Universidad Católica de Chile

Abstract: In this paper we revisit the relationship between institutions, human capital and development. We argue that empirical models that treat institutions and human capital as exogenous are misspecified both because of the usual omitted variable bias problems and because of differential measurement error in these variables, and that this misspecification is at the root of the very large returns of human capital, about 4 to 5 times greater than that implied by micro (Mincerian) estimates, found in some of the previous literature. Using cross-country and cross-regional regressions, we show that when we focus on historically-determined differences in human capital and control for the effect of institutions, the impact of institutions on long-run development is robust, while the estimates of the effect of human capital are much diminished and become consistent with micro estimates. Using historical and cross-country regression evidence, we also show that there is no support for the view that differences in the human capital endowments of early European colonists have been a major factor in the subsequent institutional development of these policies.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (233)

Downloads: (external link)
http://cliolab.economia.uc.cl/docs/wp/wp_19.pdf (application/pdf)

Related works:
Journal Article: Institutions, Human Capital, and Development * (2014)
Working Paper: Institutions, Human Capital and Development (2014)
Working Paper: Institutions, Human Capital and Development (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ioe:clabwp:19

Access Statistics for this paper

More papers in Working Papers ClioLab from EH Clio Lab. Instituto de Economía. Pontificia Universidad Católica de Chile Contact information at EDIRC.
Bibliographic data for series maintained by Jaime Casassus ().