Persistent Effects of Colonial Institutions on Human Capital Formation and Long-run Development: Local Evidence from Regression Discontinuity Design in Argentina

Rok Spruk (University of Ljubljana - Laibach)
Mitja Kovac (University of Ljubljana - Laibach)

Abstract: We exploit the geographic discontinuity in the integration into the Spanish colonial empire as a source of variation in human capital formation and long-run development across 527 departments in Argentina. A unique legal institution – the Audiencia Real – that ended more than 2 centuries ago might be very important in explaining Argentinian regional development down to the present day. To this end, we measure the department-level distance from the seat of colonial audiencia in Upper Peru that used to be source of law and colonial institutions for the areas of Rio de la Plata until its split from the Viceroyalty of Peru in 1776. Our identification strategy exploits georeferenced spatial boundary splits with local quasi-randomization between the former areas integrated in the Audiencia jurisdiction and the control areas as a source of variation in development levels. Our results show that the effect of pre-1776 colonial law and institutions imposed from the Colonial Audiencia in Upper Peru on the set of human capital and development outcomes is both strong and remarkably persistent. The evidence suggests departments outside the former Audiencia jurisdiction have lower rates of illiteracy, more computer-literate population, better physical and digital infrastructure and more widespread ownership of computers and cell phones. The established effects do not seem to be driven by outliers, and remain robust to the battery of specification checks, placebo tests and pass a number of falsification checks.

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