Dec 15, 2008

The roots of world inequality

Two Brown economists have just posted two Vox columns (here and here) about a five century migration matrix that reveals some stuff about the roots of world inequality. Namely, they find that 44% of the variance in 2000 per capita GDPs across countries is accounted for by the share of the population’s ancestors that lived in Europe in 1500. Their NBER working paper is here.

This goes well with Jared Diamond’s story, but not so well with the one of Acemoglu et. al., as in explaining cross country growth without the share of European population, settler mortality becomes correlated with the error term and cannot be used as an instrument for institutions. But this, of course, is assuming that institutions and people are two different things. Maybe this is not the case?

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