Working Paper Abstract
292."Culture and Institutions: economic development in the regions of Europe"by Guido Tabellini (IGIER, UniversitÓ Bocconi and CEPR)
Does culture have a causal effect on economic development? The data on Europeanregions suggest that it does. Culture is measured by indicators of individual valuesand beliefs, such as trust and respect for others, and confidence in individual selfdetermination.To isolate the exogenous variation in culture, I rely on two historicalvariables used as instruments: the literacy rate at the end of the XIXth century, andthe political institutions in place over the past several centuries. The political andsocial history of Europe provides a rich source of variation in these two variables at aregional level. The exogenous component of culture due to history is stronglycorrelated with current regional economic development, after controlling forcontemporaneous education, urbanization rates around 1850 and national effects.Moreover, the data do not reject the over-identifying assumption that the twohistorical variables used as instruments only influence regional development throughculture. The indicators of culture used in this paper are also strongly correlated witheconomic development and with available measures of institutions in a cross-countrysetting.
Keywords: culture, economic development, trust, literacy, institutions.
JEL Classification: O10, F10, P10, N13
Download PDF Version of paper
IGIER - Università Bocconi