Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102628
Authors: 
Galor, Oded
Munshiy, Kaivan
Wilson, Nicholas
Year of Publication: 
2013
Series/Report no.: 
Working Paper, Brown University, Department of Economics 2013-9
Abstract: 
This research advances the hypothesis that resource abundant economies characterized by a socially cohesive workforce and network externalities triggered the emergence of efficiency-enhancing inclusive institutions designed to restrict mobility and to enhance the attachment of community members to the local labor market. However, the persistence of these institutions, and the inter-generational transmission of their value, ultimately resulted in the misallocation of talents across occupations and a reduction in the long-run level of income per capita in the economy as a whole. Exploiting variation in resource intensity across the American Midwest during its initial development, the empirical analysis establishes that higher initial resource-intensity in 1860 is indeed associated with greater community participation over the subsequent 150 years, and reduced mobility and labor misallocation in the contemporary period.
Subjects: 
Inclusive institutions
Exclusive institutions
Growth
Networks
Labor misallocation
Persistence
JEL: 
I12
J13
N3
O10
Document Type: 
Working Paper

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