What question did this study set out to answer?

To re-evaluate the empirical relationship among institutions, human capital, and long-run economic development by addressing biases caused by omitted variables and differential measurement error.

August 2, 2014Annual Review of EconomicsOpen Access

Institutions, Human Capital, and Development*

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To re-evaluate the empirical relationship among institutions, human capital, and long-run economic development by addressing biases caused by omitted variables and differential measurement error.
Conducted cross-country and cross-regional regression analyses evaluating the distinct effects of institutions and historically determined human capital on economic development.
Tested the relationship between initial human capital endowments of early European colonists and the subsequent institutional trajectories of former colonies.
Institutions maintained a robust, positive impact on long-run economic development when controlling for historically determined human capital.
Human capital returns diminished significantly after controlling for institutions, resolving prior macro estimates that were four to five times higher than micro (Mincerian) estimates.
Early European colonist human capital endowments showed no significant empirical support as a major determinant of subsequent institutional development.

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Implication

Econometric analysis reveals institutions robustly drive long-run economic development across countries, indicating that inflated human capital estimates stem from model misspecification.

Cite This Study

Acemoğlu et al. (2014) studied this question.

synapsesocial.com/papers/69dee9dd7702a00918b0d1e6 https://doi.org/10.1146/annurev-economics-080213-041119

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Implication

Econometric analysis reveals institutions robustly drive long-run economic development across countries, indicating that inflated human capital estimates stem from model misspecification.

Institutions, Human Capital, and Development*

Key Points

Discussion

Implication

Cite This Study

Institutions, Human Capital, and Development*

Key Points

Discussion

Implication

Cite This Study

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