Persistent Effects of Pre-inca Settlements in North-east Peru

Abstract: The role of historical institutions in the development of countries and regions has raised interest in the last few decades. Following studies such as Dell (2010) and Acemoglu et al. (2001); we contribute to this literature by examining the hypothesis of persistent effects of Pre Inca settlements in North-East Peru. Specifically, we use variation in the territorial delineation of Pre Inca cultures to identify possible effects of the establishment of first cities and institutions on the following indicators of living standards: present day household consumption and education attainment. We use Peruvian National Household Surveys from 2007 to 2011 and a regression discontinuity design (RDD) under a multidimensional approach to identify the persistent effects of institutions. Our results indicate that households living in areas where these cultures' cities settled present 10% lower household consumption than households living marginally outside these areas. Also, education attainment of mothers is 0.4 years less than those of mothers marginally outside, on average. These results suggest that given the initial geographic characteristics and the importance of these cities, colonizers selected these areas to conquer and impose oppressive institutions related to the exploitation of minerals. The institutions imposed would have neglected the improvement of welfare in these areas, leading to lower household productive capacity and lower human capital accumulation, among other effects. We examine the possibility of differentiated effects between urban and rural households, and the possibility of bias due to the presence of capital cities. Results are robust to a number of different specifications of the RD polynomial and subsamples.