Family Characteristics and Economic Development

Abstract

This paper links economic development to age-old family characteristics through the propensity to invest and thus, increase human productivity. Inequality among siblings favors investment in physical capital, whereas a high status of women and strong parental authority favor investment in human capital. To test this theory, a family score is built according to the presence of these three characteristics in the traditional family type of each country. This family score, as well as basic family characteristics, are significantly associated with better economic outcomes (GDP per capita as well as proxies for investments in human and physical capital). These relationships are robust to other factors already identified as playing a role, such as geography, ethnic fractionalization, genetic diversity, religion and formal institutions. Reverse causality is rejected by history of family systems.

Keywords: Economic development, Family model, Cultural economics, Reversal of fortune

JEL Classification: N10, N30, N50, O10, O50, Z10