NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Institutions, Human Capital and Development

Daron Acemoglu, Francisco Gallego, James A. Robinson

NBER Working Paper No. 19933
Issued in February 2014
NBER Program(s):   DEV

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 polities.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

A data appendix is available at http://www.nber.org/data-appendix/w19933

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w19933

Users who downloaded this paper also downloaded these:
Heckman and Mosso w19925 The Economics of Human Development and Social Mobility
Acemoglu, Naidu, Restrepo, and Robinson w20004 Democracy Does Cause Growth
Glaeser, La Porta, Lopez-de-Silanes, and Shleifer w10568 Do Institutions Cause Growth?
Acemoglu, GarcĂ­a-Jimeno, and Robinson w19813 State Capacity and Economic Development: A Network Approach
Acemoglu, Laibson, and List w19851 Equalizing Superstars: The Internet and the Democratization of Education
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us