The Deep Roots of Economic Development in the U.S. States

Abstract

There is a large and growing economics literature that seeks to explain how modern economic development and cross-country income differentials are the result of ancient historic, cultural, genetic, or other factors, whose effects persist in the modern world (Spolaore and Wacziarg 2013). Referred to by some as the “Deep Roots” literature, it broadly finds that these long-standing differences, whatever their mechanism, have powerful, positive predictive power in explaining modern levels of GDP per capita and other indicators of economic development.

Drawing on Putterman and Weil (2010), we study the impact of deep roots as measured by ancestry by U.S. state, considering the average of how long each state’s ancestors have lived:

(1) under a centralized state, a variable known as “State History,” and

(2) with settled agriculture, a variable known as “Agricultural History.”

The other contributions to this literature primarily focus on how State History and Agricultural History of the population affect economic development outcomes across countries. Instead, we look at its effects on economic output per capita across the U.S. States.

We can only establish very marginal support for Putterman and Weil’s (2010) findings at the state level. Furthermore, there is no statistically significant relationship between the Deep Roots Variables score and the liberalness of a state’s economic institutions. Given the large literature on the importance of liberal economic institutions for economic growth and other outcomes (see, e.g., De Haan et al. 2006; Hall and Lawson 2014), the lack of a relationship between the quality of economic institutions and the Deep Roots Variables eliminates this institutional channel from the deep roots hypothesis.

Keywords: Economic Development, Deep Roots Variables, Economic Institutions

JEL Classification: J15