Migration, Population Composition and Long Run Economic Development: Evidence from Settlements in the Pampas

Authors


  • I am grateful to the Editor, Hans-Joachim Voth, and three anonymous referees for helpful observations. I thank Pedro Dal Bó, Ross Levine, and David Weil for their guidance and advice. Ernesto Dal Bó, Vernon Henderson, Oded Galor, Blaise Melly, Florencia Borrescio Higa and participants at LACEA-PEG 2012, Utrecht's Deep Causes of Economic Development Conference 2014, and other seminars provided valuable comments and suggestions. Financial support from the Universidad de Santiago DICYT 031462D is gratefully acknowledged.

Abstract

This article analyses the impact of population composition on long run economic development, by studying European migration to Argentina during the Age of Mass Migration (1850–1914). I use an instrumental variables (IV) approach that assigns immigrants to counties by interacting two sources of variation: the availability of land for settlement and the arrival of Europeans over time. Counties with historically higher shares of European population in 1914 have higher per capita GDP 80 years later. I show that this long run effect is linked to the higher level of human capital that immigrants brought to Argentina. I show that Europeans raised literacy rates in the receiving counties, and that high-skilled Europeans played an important role in the onset of industrialisation, owned most of the industrial establishments, and provided the majority of the industrial labour force.

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