Authors: Acemoglu, Daron; Johnson, Simon; Robinson, James A.
Number of pages: 55
In this paper, Daron Acemoglu, Simon Johnson, and James A. Robinson exploit differences in the mortality rates faced by European colonialists to estimate the effect of institutions on economic performance. Europeans adopted very different colonization policies in different colonies, with different associated institutions. In places where Europeans faced high mortality rates, they could not settle and they were more likely to set up extractive institutions. These early institutions persisted to the present. Exploiting differences in mortality rates faced by soldiers, bishops and sailors in the colonies in the 17th, 18th and 19th centuries as an instrument for current institutions, we estimate large effects of institutions on income per capita. Once we control for the effect of institutions, we find that countries in Africa or those closer to the equator do not have lower incomes.