TY - JOUR AU - Feyrer,James AU - Sacerdote,Bruce TI - Colonialism and Modern Income -- Islands as Natural Experiments JF - National Bureau of Economic Research Working Paper Series VL - No. 12546 PY - 2006 Y2 - October 2006 UR - http://www.nber.org/papers/w12546 L1 - http://www.nber.org/papers/w12546.pdf N1 - Author contact info: James Feyrer Department of Economics Dartmouth College 6106 Rockefeller Hall Hanover, NH 03755-3514 Tel: 603/646-2533 Fax: 603/646-2122 E-Mail: james.feyrer@dartmouth.edu Bruce Sacerdote 6106 Rockefeller Hall Department of Economics Dartmouth College Hanover, NH 03755-3514 Tel: 603/646-2121 Fax: 603/646-2122 E-Mail: Bruce.I.Sacerdote@dartmouth.edu M3 - presented at "SI 2006, EFABG call for papers", July 17-19, 2006 AB - Using a new database of islands throughout the Atlantic, Pacific and Indian Oceans we examine whether colonial origins affect modern economic outcomes. We argue that the nature of discovery and colonization of islands provides random variation in the length and type of colonial experience. We instrument for length of colonization using wind direction and wind speed. Wind patterns which mattered a great deal during the age of sail do not have a direct effect on GDP today, but do affect GDP via their historical impact on colonization. The number of years spent as a European colony is strongly positively related to the island's GDP per capita and negatively related to infant mortality. This basic relationship is also found to hold for a standard dataset of developing countries. We test whether this link is directly related to democratic institutions, trade, and the identity of the colonizing nation. While there is substantial variation in the history of democratic institutions across the islands, such variation does not predict income. Islands with significant export products during the colonial period are wealthier today, but this does not diminish the importance of colonial tenure. The timing of the colonial experience seems to matter. Time spent as a colony after 1700 is more beneficial to modern income than years before 1700, consistent with a change in the nature of colonial relationships over time. ER -