Introduction Model and Theory Empirics Conclusions

The Diffusion of DevelopmentThe Quarterly Journal of Economics (2009)

Enrico Spolaore Romain Wacziarg

Paola Casetta Francesco FurnoIGIER VSI Presentation

Friday, 7th March 201413:00-14:00

Introduction Model and Theory Empirics Conclusions

Authors

Figure : Enrico Spolaore Figure : Romain Wacziarg

Introduction Model and Theory Empirics Conclusions

Table of Contents

1 IntroductionResearch QuestionsFindings and ContributionsLiterature Review

2 Model and TheoryGenetic DistanceA Simple Model

3 EmpiricsWarm-UpBilateral ModelAdditional Robustness Checks

4 Conclusions

Introduction Model and Theory Empirics Conclusions

Research Questions

Question 1 Why are there differences in income per capitaacross countries?

Question 2 Why do some countries adopt the besttechnologies? Why do other countries lag behind?

Question 3 Is there a role for genetic distance in explainingeconomic distance?

Introduction Model and Theory Empirics Conclusions

Research Questions

Question 1 Why are there differences in income per capitaacross countries?

Question 2 Why do some countries adopt the besttechnologies? Why do other countries lag behind?

Question 3 Is there a role for genetic distance in explainingeconomic distance?

Introduction Model and Theory Empirics Conclusions

Research Questions

Question 1 Why are there differences in income per capitaacross countries?

Question 2 Why do some countries adopt the besttechnologies? Why do other countries lag behind?

Question 3 Is there a role for genetic distance in explainingeconomic distance?

Introduction Model and Theory Empirics Conclusions

Economic Differences

Figure : GDP per capita (PPP)

Introduction Model and Theory Empirics Conclusions

Main Findings of the Paper

Finding 1 Genetic distance matters: positive associationbetween genetic and economic differentials.

Finding 2 Relative distance more important than absolutedistance: economic diffusion.

Introduction Model and Theory Empirics Conclusions

Main Findings of the Paper

Finding 1 Genetic distance matters: positive associationbetween genetic and economic differentials.

Finding 2 Relative distance more important than absolutedistance: economic diffusion.

Introduction Model and Theory Empirics Conclusions

Importance of The Contribution

1 Economic Development as a process of diffusion

2 Interdisciplinary approach: economics and biology

3 New explanatory variable to measure the joint effect ofgrowth determinants

Introduction Model and Theory Empirics Conclusions

Importance of The Contribution

1 Economic Development as a process of diffusion

2 Interdisciplinary approach: economics and biology

3 New explanatory variable to measure the joint effect ofgrowth determinants

Introduction Model and Theory Empirics Conclusions

Importance of The Contribution

1 Economic Development as a process of diffusion

2 Interdisciplinary approach: economics and biology

3 New explanatory variable to measure the joint effect ofgrowth determinants

Introduction Model and Theory Empirics Conclusions

Literature Review and Suggested Readings I

Determinants of income per capita:

Hall and Jones, Why do some countries produce so much more outputper worker than others, 1999

Acemoglu, Johnson, Robinson, The colonial origins of comparativedevelopment, 2001

Easterly, Levine, Tropics, germs and crops: how endowments influenceeconomic development, 2003

Alcal, Ciccone, Trade and productivity, 2004

Glaeser et al., Do institutions cause growth?, 2004

Introduction Model and Theory Empirics Conclusions

Literature Review and Suggested Readings II

Role of geography on economic growth:

Jared Diamond, Guns, Germs and Steel: The Fates of Human Society,1997

Gallup & Sachs, Geography and Economic Growth, 1998

Jeffrey Sachs, Institutions Matter, but Not for Everything, 2003

Jeffrey Sachs, Government, Geography and Growth, 2012

Introduction Model and Theory Empirics Conclusions

Literature Review and Suggested Readings III

The process of development:

Acemoglu, Aghion, Zilibotti, Distance to Frontier, Selection andEconomic Growth, 2006

Koening, Lorenz, Zilibotti, Innovation vs Imitation and the Evolution ofProductivity Distribution, 2012

Economic papers using measures of genetic distance:

Guiso, Sapienza, Zingales, Cultural Biases in Economic Exchange, 2004

Giuliano, Spilimbergo, Tonon, Genetic, Cultural and GeographicalDistances, 2006

Desmet et al., Stability of Nations and Genetic Diversity, 2007

Ashraf, Galor, Human genetic diversity and comparative economic

development, 2008

Introduction Model and Theory Empirics Conclusions

Literature Review and Suggested Readings III

The process of development:

Acemoglu, Aghion, Zilibotti, Distance to Frontier, Selection andEconomic Growth, 2006

Koening, Lorenz, Zilibotti, Innovation vs Imitation and the Evolution ofProductivity Distribution, 2012

Economic papers using measures of genetic distance:

Guiso, Sapienza, Zingales, Cultural Biases in Economic Exchange, 2004

Giuliano, Spilimbergo, Tonon, Genetic, Cultural and GeographicalDistances, 2006

Desmet et al., Stability of Nations and Genetic Diversity, 2007

Ashraf, Galor, Human genetic diversity and comparative economic

development, 2008

Introduction Model and Theory Empirics Conclusions

Genetic Distance: the new variable

Genetic Distance:measure of relatedness between populations

Neutral: reflects random changes in alleles of populations (noselection pressures);

Interpretation: time since two distinct populations were justone;

Source: Cavalli-Sforza, Menozzi, Piazza, 1994.

Introduction Model and Theory Empirics Conclusions

Genetic Distance: the new variable

Genetic Distance:measure of relatedness between populations

Neutral: reflects random changes in alleles of populations (noselection pressures);

Interpretation: time since two distinct populations were justone;

Source: Cavalli-Sforza, Menozzi, Piazza, 1994.

Introduction Model and Theory Empirics Conclusions

Genetic Distance: the new variable

Genetic Distance:measure of relatedness between populations

Neutral: reflects random changes in alleles of populations (noselection pressures);

Interpretation: time since two distinct populations were justone;

Source: Cavalli-Sforza, Menozzi, Piazza, 1994.

Introduction Model and Theory Empirics Conclusions

Genetic Distance: the new variable

Genetic Distance:measure of relatedness between populations

Neutral: reflects random changes in alleles of populations (noselection pressures);

Interpretation: time since two distinct populations were justone;

Source: Cavalli-Sforza, Menozzi, Piazza, 1994.

Population Tree

0

o p h Time

1

2

1.1

1.2

2.1

2.2

FIGURE IPopulation Tree

Introduction Model and Theory Empirics Conclusions

Genetic Distance: inside the black-box

Genetic Distance :

wide range of traits and characteristics

transmitted across generations with variation

through culture and genetics

capturing divergence in implicit beliefs, customs, habits,biases, conventions, etc...!

Genetic distance is an excellent summary statistics of a varietyof usually unobservable variables !

Introduction Model and Theory Empirics Conclusions

Genetic Distance: inside the black-box

Genetic Distance :

wide range of traits and characteristics

transmitted across generations with variation

through culture and genetics

capturing divergence in implicit beliefs, customs, habits,biases, conventions, etc...!

Genetic distance is an excellent summary statistics of a varietyof usually unobservable variables !

Introduction Model and Theory Empirics Conclusions

Genetic Distance: inside the black-box

Genetic Distance :

wide range of traits and characteristics

transmitted across generations with variation

through culture and genetics

capturing divergence in implicit beliefs, customs, habits,biases, conventions, etc...!

Genetic distance is an excellent summary statistics of a varietyof usually unobservable variables !

Introduction Model and Theory Empirics Conclusions

Genetic Distance: inside the black-box

Genetic Distance :

wide range of traits and characteristics

transmitted across generations with variation

through culture and genetics

capturing divergence in implicit beliefs, customs, habits,biases, conventions, etc...!

Genetic distance is an excellent summary statistics of a varietyof usually unobservable variables !

Introduction Model and Theory Empirics Conclusions

Genetic Distance: inside the black-box

Genetic Distance :

wide range of traits and characteristics

transmitted across generations with variation

through culture and genetics

capturing divergence in implicit beliefs, customs, habits,biases, conventions, etc...!

Genetic distance is an excellent summary statistics of a varietyof usually unobservable variables !

Introduction Model and Theory Empirics Conclusions

Genetic Distance and Economic Distance

Authors’ suggested channel:

Genetic Distance

⇓Cultural & Biological Diversity

⇓Barriers to diffusion of innovations

⇓Economic Distance

Introduction Model and Theory Empirics Conclusions

Genetic Distance and Economic Distance

Authors’ suggested channel:

Genetic Distance⇓

Cultural & Biological Diversity

⇓Barriers to diffusion of innovations

⇓Economic Distance

Introduction Model and Theory Empirics Conclusions

Genetic Distance and Economic Distance

Authors’ suggested channel:

Genetic Distance⇓

Cultural & Biological Diversity⇓

Barriers to diffusion of innovations

⇓Economic Distance

Introduction Model and Theory Empirics Conclusions

Genetic Distance and Economic Distance

Authors’ suggested channel:

Genetic Distance⇓

Cultural & Biological Diversity⇓

Barriers to diffusion of innovations⇓

Economic Distance

Introduction Model and Theory Empirics Conclusions

A Simple Model of Diffusion I

Model of vertical transmission:

vi is the set of vertical characteristics of population i

dg (i , j) = genetic distance between population i and j ;

Law of transmission:

v ′i = vi + η′i (1)

where v ′i belongs to the population descending from i and ηi is arandom variation.

dv (i , j) = |vj − vi | is the distance in vertical characteristics

Notice that dv (i , j) is increasing in dg (i , j).

Introduction Model and Theory Empirics Conclusions

A Simple Model of Diffusion II

At t = 0 all populations start from the same initial condition:

Yt,i = At,iLi,t ⇒ yt,i = At,i ∀i

Motion and Diffusion of technology:

At+1,i = At,i + ∆i (2)

∆i = [1− βdv (i , f )]∆ (3)

where ∆i is the productivity increase for population i and ∆ is the

productivity increase of the frontier population f .

Introduction Model and Theory Empirics Conclusions

A Simple Model of Diffusion II

At t = 0 all populations start from the same initial condition:

Yt,i = At,iLi,t ⇒ yt,i = At,i ∀i

Motion and Diffusion of technology:

At+1,i = At,i + ∆i (2)

∆i = [1− βdv (i , f )]∆ (3)

where ∆i is the productivity increase for population i and ∆ is the

productivity increase of the frontier population f .

Introduction Model and Theory Empirics Conclusions

A Simple Model of Diffusion III

Income per capita:

yi,t = At−1 + [1− βdv (i , f )]∆ (4)

Economic distance:

de(i , j) ≡ |yj − yi | = β∆|dv (i , f )− dv (j , f )| (5)

Corr [de(i , j), dg (i , j)] > 0 (6)

β is the policy parameter!

Introduction Model and Theory Empirics Conclusions

A Simple Model of Diffusion III

Income per capita:

yi,t = At−1 + [1− βdv (i , f )]∆ (4)

Economic distance:

de(i , j) ≡ |yj − yi | = β∆|dv (i , f )− dv (j , f )| (5)

Corr [de(i , j), dg (i , j)] > 0 (6)

β is the policy parameter!

Introduction Model and Theory Empirics Conclusions

A Simple Model of Diffusion III

Income per capita:

yi,t = At−1 + [1− βdv (i , f )]∆ (4)

Economic distance:

de(i , j) ≡ |yj − yi | = β∆|dv (i , f )− dv (j , f )| (5)

Corr [de(i , j), dg (i , j)] > 0 (6)

β is the policy parameter!

Introduction Model and Theory Empirics Conclusions

Implications from the Model

Implication 1 Relative genetic distance from the frontier ispositively correlated with differences in income percapita (economic distance);

Implication 2 The effect on income differences associated withrelative genetic distance from the frontier is largerthan the effect associated with absolute geneticdistance.

Introduction Model and Theory Empirics Conclusions

Implications from the Model

Implication 1 Relative genetic distance from the frontier ispositively correlated with differences in income percapita (economic distance);

Implication 2 The effect on income differences associated withrelative genetic distance from the frontier is largerthan the effect associated with absolute geneticdistance.

Channels of Transmission

p

Direct effect (D) Barrier effect (B)Genetic transmission (GT) Quadrant I Quadrant IICultural transmission (CT) Quadrant III Quadrant IV

Direct Effect is ruled out by the authors.

Assumptions:

Neutral Variation ⇒ No direct effect on productivity;

Innovation is exogenous ⇒ Only diffusion channel is explored.

Evidence from Europe subsample ⇒ Only Quadrant IVrelevant.

Critique : Do we really believe that the direct channel can bedismissed?

Channels of Transmission

p

Direct effect (D) Barrier effect (B)Genetic transmission (GT) Quadrant I Quadrant IICultural transmission (CT) Quadrant III Quadrant IV

Direct Effect is ruled out by the authors.Assumptions:

Neutral Variation ⇒ No direct effect on productivity;

Innovation is exogenous ⇒ Only diffusion channel is explored.

Evidence from Europe subsample ⇒ Only Quadrant IVrelevant.

Critique : Do we really believe that the direct channel can bedismissed?

Channels of Transmission

p

Direct effect (D) Barrier effect (B)Genetic transmission (GT) Quadrant I Quadrant IICultural transmission (CT) Quadrant III Quadrant IV

Direct Effect is ruled out by the authors.Assumptions:

Neutral Variation ⇒ No direct effect on productivity;

Innovation is exogenous ⇒ Only diffusion channel is explored.

Evidence from Europe subsample ⇒ Only Quadrant IVrelevant.

Critique : Do we really believe that the direct channel can bedismissed?

Channels of Transmission

p

Direct effect (D) Barrier effect (B)Genetic transmission (GT) Quadrant I Quadrant IICultural transmission (CT) Quadrant III Quadrant IV

Direct Effect is ruled out by the authors.Assumptions:

Neutral Variation ⇒ No direct effect on productivity;

Innovation is exogenous ⇒ Only diffusion channel is explored.

Evidence from Europe subsample ⇒ Only Quadrant IVrelevant.

Critique : Do we really believe that the direct channel can bedismissed?

Channels of Transmission

p

Direct effect (D) Barrier effect (B)Genetic transmission (GT) Quadrant I Quadrant IICultural transmission (CT) Quadrant III Quadrant IV

Direct Effect is ruled out by the authors.Assumptions:

Neutral Variation ⇒ No direct effect on productivity;

Innovation is exogenous ⇒ Only diffusion channel is explored.

Evidence from Europe subsample ⇒ Only Quadrant IVrelevant.

Critique : Do we really believe that the direct channel can bedismissed?

Genetic Distance on Income Levels

DZA

ARG

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BWABRABGR

BFABDI

KHM CMR

CAN

CAFTCD

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COL

COG

CRI

CIV

CYP

DNK

DOM

ECUEGY

SLV

EST

ETH

FINFRA

GAB

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GRC

GTM

GIN

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HUN

IND

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IRL ISRITA

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MAR

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NAM

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NER NGA

NOR

OMN

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PANPRY PERPHL

POL

PRT

ROMRUS

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ESP

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TUN TUR

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UKR

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USA

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1995

0 0.05 0.1 0.15 0.2FST genetic distance to the United States, weighted

Genetic Distance on Income LevelsTABLE I

INCOME LEVEL REGRESSIONS, WORLD DATA SET

(2) (3)Add Add linguistic

(1) geographic and religiousUnivariate distance distance

FST genetic distance to the −12.906 −12.523 −10.245United States, weighted (1.383)∗∗ (1.558)∗∗ (1.567)∗∗

Absolute difference in latitude 1.970 1.518from the United States (0.868)∗∗ (0.827)∗

Absolute difference in longitude 0.438 0.786from the United States (0.454) (0.401)∗

Geodesic distance from the −0.179 −0.191United States (1,000s of km) (0.075)∗∗ (0.071)∗∗

=1 for contiguity with the 1.055 0.452United States (0.300)∗∗ (0.390)

=1 if the country is an island 0.505 0.362(0.397) (0.483)

=1 if the country is landlocked −0.384 −0.410(0.206)∗ (0.198)∗∗

=1 if the country shares at least one −0.201 −0.080sea or ocean with the United States (0.197) (0.171)

Freight rate to northeastern 3.460 5.794United States (surface transport) (2.507) (2.816)∗∗

Linguistic distance to the −0.520United States, weighted (0.648)

Religious distance to the United −2.875States, weighted (0.591)∗∗

Constant 9.421 8.876 10.499(0.149)∗∗ (0.536)∗∗ (0.751)∗∗

Observations 137 137 137Adjusted R2 .39 .46 .53

Note. Dependent variable: log income per capita 1995.Robust standard errors in parentheses.

Genetic Distance on Income LevelsTABLE I

INCOME LEVEL REGRESSIONS, WORLD DATA SET

(2) (3)Add Add linguistic

(1) geographic and religiousUnivariate distance distance

FST genetic distance to the −12.906 −12.523 −10.245United States, weighted (1.383)∗∗ (1.558)∗∗ (1.567)∗∗

Absolute difference in latitude 1.970 1.518from the United States (0.868)∗∗ (0.827)∗

Absolute difference in longitude 0.438 0.786from the United States (0.454) (0.401)∗

Geodesic distance from the −0.179 −0.191United States (1,000s of km) (0.075)∗∗ (0.071)∗∗

=1 for contiguity with the 1.055 0.452United States (0.300)∗∗ (0.390)

=1 if the country is an island 0.505 0.362(0.397) (0.483)

=1 if the country is landlocked −0.384 −0.410(0.206)∗ (0.198)∗∗

=1 if the country shares at least one −0.201 −0.080sea or ocean with the United States (0.197) (0.171)

Freight rate to northeastern 3.460 5.794United States (surface transport) (2.507) (2.816)∗∗

Linguistic distance to the −0.520United States, weighted (0.648)

Religious distance to the United −2.875States, weighted (0.591)∗∗

Constant 9.421 8.876 10.499(0.149)∗∗ (0.536)∗∗ (0.751)∗∗

Observations 137 137 137Adjusted R2 .39 .46 .53

Note. Dependent variable: log income per capita 1995.Robust standard errors in parentheses.

Introduction Model and Theory Empirics Conclusions

Genetic Distance on Income Levels

Preliminary Results:

1 Sign

2 Significance

3 Size

4 Robustness

5 Shared Variance, i.e. R2

Introduction Model and Theory Empirics Conclusions

Regression Model: Bilateral Approach

Data: 137 countries; 9,316 matched couples (cross-sections).

Absolute Distance Specification:

|logyi − logyj | = β0 + β1GDi ,j + β′2Xi ,j + εi ,j (7)

where X is the set of controls that will be used throughout; GDi,j is

the absolute genetic distance (ex. France vs Canada);

Relative Distance Specification:

|logyi − logyj | = β0 + β1GRi ,j + β′2Xi ,j + εi ,j (8)

where GRi,j is the relative genetic distance defined as

GRi,j = |GD

i,F − GDi,F |, where F is the frontier (US for 1900 and UK

for 1500).

Introduction Model and Theory Empirics Conclusions

Regression Model: Bilateral Approach

Data: 137 countries; 9,316 matched couples (cross-sections).

Absolute Distance Specification:

|logyi − logyj | = β0 + β1GDi ,j + β′2Xi ,j + εi ,j (7)

where X is the set of controls that will be used throughout; GDi,j is

the absolute genetic distance (ex. France vs Canada);

Relative Distance Specification:

|logyi − logyj | = β0 + β1GRi ,j + β′2Xi ,j + εi ,j (8)

where GRi,j is the relative genetic distance defined as

GRi,j = |GD

i,F − GDi,F |, where F is the frontier (US for 1900 and UK

for 1500).

Introduction Model and Theory Empirics Conclusions

Regression Model: Bilateral Approach

Data: 137 countries; 9,316 matched couples (cross-sections).

Absolute Distance Specification:

|logyi − logyj | = β0 + β1GDi ,j + β′2Xi ,j + εi ,j (7)

where X is the set of controls that will be used throughout; GDi,j is

the absolute genetic distance (ex. France vs Canada);

Relative Distance Specification:

|logyi − logyj | = β0 + β1GRi ,j + β′2Xi ,j + εi ,j (8)

where GRi,j is the relative genetic distance defined as

GRi,j = |GD

i,F − GDi,F |, where F is the frontier (US for 1900 and UK

for 1500).

Different Measures of Genetic Distance

TABLE IIIUNIVARIATE REGRESSIONS (TWO-WAY CLUSTERED STANDARD ERRORS)

(2) (3) (4) (5) (6)(1) FST gen. dist. relative Weighted FST Weighted FST gen. dist., Weighted Nei Weighted

FST gen. dist. to United States gen. dist. relative to United States gen. dist. regression

FST genetic distance 1.853 2.214(0.508)∗∗ (0.533)∗∗

FST genetic distance 3.541relative to the United States (0.654)∗∗

Weighted FST genetic 2.516distance (0.630)∗∗

FST gen. dist. relative 6.357to the United States, weighted (0.996)∗∗

Weighted Nei genetic 16.868distance (3.792)∗∗

Constant 1.079 0.977 1.010 0.893 0.986 1.044(0.051)∗∗ (0.049)∗∗ (0.059)∗∗ (0.052)∗∗ (0.057)∗∗ (0.050)∗∗

Standardized beta (%) 16.79 26.98 19.71 33.65 27.01 20.07R2 .03 .07 .04 .11 .05 .03

Notes. Dependent variable: absolute value of log income differences, 1995. Two-way clustered standard errors in parentheses; 9,316 observations from 137 countries.∗Significant at 10%.∗∗Significant at 5%.

? Dependent variable : yi,j = |log(incomei )− log(incomej )|

Different Measures of Genetic Distance

TABLE IIIUNIVARIATE REGRESSIONS (TWO-WAY CLUSTERED STANDARD ERRORS)

(2) (3) (4) (5) (6)(1) FST gen. dist. relative Weighted FST Weighted FST gen. dist., Weighted Nei Weighted

FST gen. dist. to United States gen. dist. relative to United States gen. dist. regression

FST genetic distance 1.853 2.214(0.508)∗∗ (0.533)∗∗

FST genetic distance 3.541relative to the United States (0.654)∗∗

Weighted FST genetic 2.516distance (0.630)∗∗

FST gen. dist. relative 6.357to the United States, weighted (0.996)∗∗

Weighted Nei genetic 16.868distance (3.792)∗∗

Constant 1.079 0.977 1.010 0.893 0.986 1.044(0.051)∗∗ (0.049)∗∗ (0.059)∗∗ (0.052)∗∗ (0.057)∗∗ (0.050)∗∗

Standardized beta (%) 16.79 26.98 19.71 33.65 27.01 20.07R2 .03 .07 .04 .11 .05 .03

Notes. Dependent variable: absolute value of log income differences, 1995. Two-way clustered standard errors in parentheses; 9,316 observations from 137 countries.∗Significant at 10%.∗∗Significant at 5%.Observation 1 Weighted Genetic Distance � Unweighted Genetic Distance

Observation 2 Relative Genetic Distance � Absolute Genetic Distance

Observation 3 Weighted FST genetic distance relative to United Statesµ = 0.062, σ = 0.048,min = 0.000,max = 0.213

Different Measures of Genetic Distance

TABLE IIIUNIVARIATE REGRESSIONS (TWO-WAY CLUSTERED STANDARD ERRORS)

(2) (3) (4) (5) (6)(1) FST gen. dist. relative Weighted FST Weighted FST gen. dist., Weighted Nei Weighted

FST gen. dist. to United States gen. dist. relative to United States gen. dist. regression

FST genetic distance 1.853 2.214(0.508)∗∗ (0.533)∗∗

FST genetic distance 3.541relative to the United States (0.654)∗∗

Weighted FST genetic 2.516distance (0.630)∗∗

FST gen. dist. relative 6.357to the United States, weighted (0.996)∗∗

Weighted Nei genetic 16.868distance (3.792)∗∗

Constant 1.079 0.977 1.010 0.893 0.986 1.044(0.051)∗∗ (0.049)∗∗ (0.059)∗∗ (0.052)∗∗ (0.057)∗∗ (0.050)∗∗

Standardized beta (%) 16.79 26.98 19.71 33.65 27.01 20.07R2 .03 .07 .04 .11 .05 .03

Notes. Dependent variable: absolute value of log income differences, 1995. Two-way clustered standard errors in parentheses; 9,316 observations from 137 countries.∗Significant at 10%.∗∗Significant at 5%.Observation 1 Weighted Genetic Distance � Unweighted Genetic Distance

Observation 2 Relative Genetic Distance � Absolute Genetic Distance

Observation 3 Weighted FST genetic distance relative to United Statesµ = 0.062, σ = 0.048,min = 0.000,max = 0.213

Different Measures of Genetic Distance

TABLE IIIUNIVARIATE REGRESSIONS (TWO-WAY CLUSTERED STANDARD ERRORS)

(2) (3) (4) (5) (6)(1) FST gen. dist. relative Weighted FST Weighted FST gen. dist., Weighted Nei Weighted

FST gen. dist. to United States gen. dist. relative to United States gen. dist. regression

FST genetic distance 1.853 2.214(0.508)∗∗ (0.533)∗∗

FST genetic distance 3.541relative to the United States (0.654)∗∗

Weighted FST genetic 2.516distance (0.630)∗∗

FST gen. dist. relative 6.357to the United States, weighted (0.996)∗∗

Weighted Nei genetic 16.868distance (3.792)∗∗

Constant 1.079 0.977 1.010 0.893 0.986 1.044(0.051)∗∗ (0.049)∗∗ (0.059)∗∗ (0.052)∗∗ (0.057)∗∗ (0.050)∗∗

Standardized beta (%) 16.79 26.98 19.71 33.65 27.01 20.07R2 .03 .07 .04 .11 .05 .03

Notes. Dependent variable: absolute value of log income differences, 1995. Two-way clustered standard errors in parentheses; 9,316 observations from 137 countries.∗Significant at 10%.∗∗Significant at 5%.Observation 1 Weighted Genetic Distance � Unweighted Genetic Distance

Observation 2 Relative Genetic Distance � Absolute Genetic Distance

Observation 3 Weighted FST genetic distance relative to United Statesµ = 0.062, σ = 0.048,min = 0.000,max = 0.213

Introduction Model and Theory Empirics Conclusions

Weighted Genetic Distance

Introduction Model and Theory Empirics Conclusions

Different Measures of Genetic Distance

Result: Relative Genetic Distance has more explanatorypower than Absolute Genetic Distance

Proposed Explanation:Diffusion Process ⇒ Distance from Frontier Country (US)more important

Implication 2 seems to be verified!

Introduction Model and Theory Empirics Conclusions

Different Measures of Genetic Distance

Result: Relative Genetic Distance has more explanatorypower than Absolute Genetic Distance

Proposed Explanation:Diffusion Process ⇒ Distance from Frontier Country (US)more important

Implication 2 seems to be verified!

Introduction Model and Theory Empirics Conclusions

Different Measures of Genetic Distance

Result: Relative Genetic Distance has more explanatorypower than Absolute Genetic Distance

Proposed Explanation:Diffusion Process ⇒ Distance from Frontier Country (US)more important

Implication 2 seems to be verified!

Controlling for Geography

TABLE IVCONTROLLING FOR GEOGRAPHIC DISTANCE (TWO-WAY CLUSTERED STANDARD ERRORS)

(2) (3) (4) (5) (6) (7)(1) Distance Add micro- Add transport Continent Climatic difference Tropical difference

Baseline metrics geography controls costs dummies control control

FST gen. dist. relative to the 6.357 6.387 6.273 6.312 4.134 6.067 6.368United States, weighted (0.996)∗∗ (0.994)∗∗ (0.989)∗∗ (0.988)∗∗ (1.046)∗∗ (0.960)∗∗ (1.003)∗∗

Absolute difference in 0.523 0.494 0.494 −0.228 0.254 0.497latitudes (0.241)∗∗ (0.238)∗∗ (0.237)∗∗ (0.217) (0.221) (0.237)∗∗

Absolute difference in 0.387 0.391 0.376 0.084 0.257 0.380longitudes (0.235)∗ (0.226)∗ (0.224)∗ (0.162) (0.224) (0.224)∗

Geodesic distance −0.050 −0.057 −0.081 −0.008 −0.062 −0.081(1,000s of km) (0.028)∗ (0.026)∗∗ (0.039)∗∗ (0.036) (0.038)∗ (0.039)∗∗

=1 for contiguity −0.456 −0.462 −0.284 −0.328 −0.464(0.064)∗∗ (0.064)∗∗ (0.060)∗∗ (0.061)∗∗ (0.064)∗∗

=1 if either country is an 0.178 0.180 0.119 0.162 0.181island (0.094)∗ (0.094)∗ (0.090) (0.102) (0.092)∗

=1 if either country is 0.071 0.078 0.110 0.084 0.075landlocked (0.076) (0.076) (0.071) (0.076) (0.075)

=1 if pair shares at least one −0.029 −0.024 0.030 0.044 −0.024sea or ocean (0.062) (0.062) (0.050) (0.059) (0.062)

Freight rate 1.282 −0.197 1.160 1.286(surface transport) (1.568) (1.517) (1.490) (1.583)

Climatic difference of land 0.032areas, by 12 KG zones (0.007)∗∗

Difference in % land area in −0.033KG tropical climates (0.083)

Controlling for Geography

TABLE IVCONTROLLING FOR GEOGRAPHIC DISTANCE (TWO-WAY CLUSTERED STANDARD ERRORS)

(2) (3) (4) (5) (6) (7)(1) Distance Add micro- Add transport Continent Climatic difference Tropical difference

Baseline metrics geography controls costs dummies control control

FST gen. dist. relative to the 6.357 6.387 6.273 6.312 4.134 6.067 6.368United States, weighted (0.996)∗∗ (0.994)∗∗ (0.989)∗∗ (0.988)∗∗ (1.046)∗∗ (0.960)∗∗ (1.003)∗∗

Absolute difference in 0.523 0.494 0.494 −0.228 0.254 0.497latitudes (0.241)∗∗ (0.238)∗∗ (0.237)∗∗ (0.217) (0.221) (0.237)∗∗

Absolute difference in 0.387 0.391 0.376 0.084 0.257 0.380longitudes (0.235)∗ (0.226)∗ (0.224)∗ (0.162) (0.224) (0.224)∗

Geodesic distance −0.050 −0.057 −0.081 −0.008 −0.062 −0.081(1,000s of km) (0.028)∗ (0.026)∗∗ (0.039)∗∗ (0.036) (0.038)∗ (0.039)∗∗

=1 for contiguity −0.456 −0.462 −0.284 −0.328 −0.464(0.064)∗∗ (0.064)∗∗ (0.060)∗∗ (0.061)∗∗ (0.064)∗∗

=1 if either country is an 0.178 0.180 0.119 0.162 0.181island (0.094)∗ (0.094)∗ (0.090) (0.102) (0.092)∗

=1 if either country is 0.071 0.078 0.110 0.084 0.075landlocked (0.076) (0.076) (0.071) (0.076) (0.075)

=1 if pair shares at least one −0.029 −0.024 0.030 0.044 −0.024sea or ocean (0.062) (0.062) (0.050) (0.059) (0.062)

Freight rate 1.282 −0.197 1.160 1.286(surface transport) (1.568) (1.517) (1.490) (1.583)

Climatic difference of land 0.032areas, by 12 KG zones (0.007)∗∗

Difference in % land area in −0.033KG tropical climates (0.083)

Introduction Model and Theory Empirics Conclusions

Controlling for Geography

Results:

Sign

Significance

Size

Robust

Low Shared Variance (between 11-15%)

Continent Dummy:reduction in size and higher shared variance (0.22)

Why? Cross-continental barriers.

Again, diffusion framework!

Introduction Model and Theory Empirics Conclusions

Controlling for Geography

Results:

Sign

Significance

Size

Robust

Low Shared Variance (between 11-15%)

Continent Dummy:reduction in size and higher shared variance (0.22)

Why? Cross-continental barriers.

Again, diffusion framework!

Introduction Model and Theory Empirics Conclusions

Controlling for Geography

Results:

Sign

Significance

Size

Robust

Low Shared Variance (between 11-15%)

Continent Dummy:reduction in size and higher shared variance (0.22)

Why? Cross-continental barriers.

Again, diffusion framework!

Introduction Model and Theory Empirics Conclusions

Controlling for Geography

Results:

Sign

Significance

Size

Robust

Low Shared Variance (between 11-15%)

Continent Dummy:reduction in size and higher shared variance (0.22)

Why? Cross-continental barriers.

Again, diffusion framework!

Endogeneity and Diamond GapTABLE V

ENDOGENEITY OF GENETIC DISTANCE AND DIAMOND GAP (TWO-WAY CLUSTERED

STANDARD ERRORS)

(1) (2) (3)2SLS with Without Diamond (4)

1500 genetic New gap, w/o Income 1500,distance World New World Diamond gap

FST genetic distance 9.400 4.428 2.815relative to the United (1.665)∗∗ (1.252)∗∗ (1.347)∗∗

States, weightedFST genetic distance 1.737

relative to the English, (0.427)∗∗

1500 matchAbsolute difference in 0.402 0.901 1.078 0.152

latitudes (0.293) (0.420)∗∗ (0.471)∗∗ (0.138)Absolute difference in 0.601 0.349 0.781 −0.007

longitudes (0.246)∗∗ (0.258) (0.333)∗∗ (0.070)Geodesic distance −0.114 −0.087 −0.155 −0.016

(1,000s of km) (0.039)∗∗ (0.051)∗ (0.055)∗∗ (0.022)=1 for contiguity −0.381 −0.471 −0.461 −0.048

(0.063)∗∗ (0.069)∗∗ (0.067)∗∗ (0.040)=1 if either country is 0.209 0.134 0.176 0.004

an island (0.094)∗∗ (0.113) (0.115) (0.053)=1 if either country is 0.052 0.016 0.022 −0.059

landlocked (0.076) (0.081) (0.076) (0.034)∗

=1 if pair shares at −0.043 −0.060 −0.071 −0.068least one sea or ocean (0.077) (0.087) (0.085) (0.047)

Freight rate 1.700 1.627 1.508 −0.263(surface transport) (1.341) (1.809) (1.781) (0.847)

Diamond gap 0.472 0.164(0.137)∗∗ (0.059)∗∗

Constant 0.488 0.701 0.760 0.338(0.241)∗∗ (0.312)∗∗ (0.309)∗∗ (0.144)∗∗

# of observations 9,316 6,105 6,105 325# of countries 137 111 111 26Standardized beta (%) 49.75 23.56 14.98 37.96R2 .10 .11 .13 .22

Notes. Dependent variable: absolute value of log income differences, 1995 (columns (1)–(3)) or 1500(column (4)).Two-way clustered standard errors in parentheses. The Diamond gap is a dummy variable that takes ona value of 1 if one and only one of the countries in each pair is located on the Eurasian landmass, and 0otherwise.∗Si ifi t t 10%

Introduction Model and Theory Empirics Conclusions

Endogeneity and Diamond Gap

Results

2SLS : better matching of population ∧ frontier is UK

Endogeneity : similar populations settled in regions prone togenerating similar incomes

Diamond Hypothesis : Eurasia enjoyed major advantages

potentially domesticable plants and animalsEast-West Axis

Diamond Gap Result : diffusion of development faster in Eurasia

1500 Income : few observation ∧ consistent results

Introduction Model and Theory Empirics Conclusions

Endogeneity and Diamond Gap

Results

2SLS : better matching of population ∧ frontier is UK

Endogeneity : similar populations settled in regions prone togenerating similar incomes

Diamond Hypothesis : Eurasia enjoyed major advantages

potentially domesticable plants and animalsEast-West Axis

Diamond Gap Result : diffusion of development faster in Eurasia

1500 Income : few observation ∧ consistent results

Introduction Model and Theory Empirics Conclusions

Endogeneity and Diamond Gap

Results

2SLS : better matching of population ∧ frontier is UK

Endogeneity : similar populations settled in regions prone togenerating similar incomes

Diamond Hypothesis : Eurasia enjoyed major advantages

potentially domesticable plants and animalsEast-West Axis

Diamond Gap Result : diffusion of development faster in Eurasia

1500 Income : few observation ∧ consistent results

Introduction Model and Theory Empirics Conclusions

Endogeneity and Diamond Gap

Results

2SLS : better matching of population ∧ frontier is UK

Endogeneity : similar populations settled in regions prone togenerating similar incomes

Diamond Hypothesis : Eurasia enjoyed major advantages

potentially domesticable plants and animalsEast-West Axis

Diamond Gap Result : diffusion of development faster in Eurasia

1500 Income : few observation ∧ consistent results

Introduction Model and Theory Empirics Conclusions

Endogeneity and Diamond Gap

Results

2SLS : better matching of population ∧ frontier is UK

Endogeneity : similar populations settled in regions prone togenerating similar incomes

Diamond Hypothesis : Eurasia enjoyed major advantages

potentially domesticable plants and animalsEast-West Axis

Diamond Gap Result : diffusion of development faster in Eurasia

1500 Income : few observation ∧ consistent results

Introduction Model and Theory Empirics Conclusions

Endogeneity and Diamond Gap

Results

2SLS : better matching of population ∧ frontier is UK

Endogeneity : similar populations settled in regions prone togenerating similar incomes

Diamond Hypothesis : Eurasia enjoyed major advantages

potentially domesticable plants and animalsEast-West Axis

Diamond Gap Result : diffusion of development faster in Eurasia

1500 Income : few observation ∧ consistent results

Controlling for Common History, Religious and LinguisticDistance

TABLE VIICONTROLLING FOR COMMON HISTORY, LINGUISTIC DISTANCE, AND RELIGIOUS DISTANCE (TWO-WAY CLUSTERED STANDARD ERRORS)

(2) (3) (4) (5) (6)Colonial Linguistic Religious Religious + Baseline (7)

(1) history distance, distance, linguistic, (smaller % cognate,Baseline controls weighted weighted weighted sample) plurality

FST gen. dist. relative 6.312 6.283 5.827 5.702 5.557 6.853 5.995to the United States, weighted (0.988)∗∗ (0.988)∗∗ (0.944)∗∗ (0.950)∗∗ (0.940)∗∗ (2.116)∗∗ (2.109)∗∗

=1 if countries were or −0.217 −0.223 −0.209 −0.214 −0.262 −0.196are the same country (0.088)∗∗ (0.087)∗∗ (0.087)∗∗ (0.087)∗∗ (0.084)∗∗ (0.090)∗∗

=1 for pairs ever in 0.304 0.255 0.307 0.282 0.109 0.167colonial relationship (0.131)∗∗ (0.134)∗ (0.101)∗∗ (0.106)∗∗ (0.112) (0.119)

=1 for common colonizer −0.226 −0.214 −0.135 −0.142 −0.046 −0.038post-1945 (0.066)∗∗ (0.063)∗∗ (0.060)∗∗ (0.059)∗∗ (0.111) (0.082)

=1 for pairs currently in −1.033 −0.823 −0.969 −0.873 −0.720 −0.444colonial relationship (0.193)∗∗ (0.200)∗∗ (0.167)∗∗ (0.176)∗∗ (0.162)∗∗ (0.179)∗∗

Linguistic distance index, 0.815 0.409relative to United States, weighted (0.204)∗∗ (0.292)

Religious distance index, 1.373 1.172relative to United States, weighted (0.266)∗∗ (0.317)∗∗

1 − % cognate, relative to 0.631United States, plurality (0.185)∗∗

Constant 0.675 0.740 0.849 0.703 0.763 1.053 0.928(0.263)∗∗ (0.257)∗∗ (0.246)∗∗ (0.250)∗∗ (0.246)∗∗ (0.179)∗∗ (0.188)∗∗

Standardized beta (%) 33.41 33.26 30.84 30.18 29.42 23.58 20.63R2 .13 .14 .16 .17 .18 .14 .19

Note. Dependent variable: absolute value of log income differences, 1995. Two-way clustered standard errors in parentheses. 9,316 observations from 137 countries in columns(1)–(5), 1,830 observations from 61 countries in columns (6) and (7). All columns include geographic controls, that is, absolute difference in latitudes, absolute difference in longitudes,geodesic distance, dummy for contiguity, dummy = 1 if either country is an island, dummy = 1 if either country is landlocked, dummy = 1 if pair shares at least one sea or ocean,freight rate for surface transport (estimates not reported).∗Significant at 10%.∗∗Significant at 5%.

Controlling for Common History, Religious and LinguisticDistance

TABLE VIICONTROLLING FOR COMMON HISTORY, LINGUISTIC DISTANCE, AND RELIGIOUS DISTANCE (TWO-WAY CLUSTERED STANDARD ERRORS)

(2) (3) (4) (5) (6)Colonial Linguistic Religious Religious + Baseline (7)

(1) history distance, distance, linguistic, (smaller % cognate,Baseline controls weighted weighted weighted sample) plurality

FST gen. dist. relative 6.312 6.283 5.827 5.702 5.557 6.853 5.995to the United States, weighted (0.988)∗∗ (0.988)∗∗ (0.944)∗∗ (0.950)∗∗ (0.940)∗∗ (2.116)∗∗ (2.109)∗∗

=1 if countries were or −0.217 −0.223 −0.209 −0.214 −0.262 −0.196are the same country (0.088)∗∗ (0.087)∗∗ (0.087)∗∗ (0.087)∗∗ (0.084)∗∗ (0.090)∗∗

=1 for pairs ever in 0.304 0.255 0.307 0.282 0.109 0.167colonial relationship (0.131)∗∗ (0.134)∗ (0.101)∗∗ (0.106)∗∗ (0.112) (0.119)

=1 for common colonizer −0.226 −0.214 −0.135 −0.142 −0.046 −0.038post-1945 (0.066)∗∗ (0.063)∗∗ (0.060)∗∗ (0.059)∗∗ (0.111) (0.082)

=1 for pairs currently in −1.033 −0.823 −0.969 −0.873 −0.720 −0.444colonial relationship (0.193)∗∗ (0.200)∗∗ (0.167)∗∗ (0.176)∗∗ (0.162)∗∗ (0.179)∗∗

Linguistic distance index, 0.815 0.409relative to United States, weighted (0.204)∗∗ (0.292)

Religious distance index, 1.373 1.172relative to United States, weighted (0.266)∗∗ (0.317)∗∗

1 − % cognate, relative to 0.631United States, plurality (0.185)∗∗

Constant 0.675 0.740 0.849 0.703 0.763 1.053 0.928(0.263)∗∗ (0.257)∗∗ (0.246)∗∗ (0.250)∗∗ (0.246)∗∗ (0.179)∗∗ (0.188)∗∗

Standardized beta (%) 33.41 33.26 30.84 30.18 29.42 23.58 20.63R2 .13 .14 .16 .17 .18 .14 .19

Note. Dependent variable: absolute value of log income differences, 1995. Two-way clustered standard errors in parentheses. 9,316 observations from 137 countries in columns(1)–(5), 1,830 observations from 61 countries in columns (6) and (7). All columns include geographic controls, that is, absolute difference in latitudes, absolute difference in longitudes,geodesic distance, dummy for contiguity, dummy = 1 if either country is an island, dummy = 1 if either country is landlocked, dummy = 1 if pair shares at least one sea or ocean,freight rate for surface transport (estimates not reported).∗Significant at 10%.∗∗Significant at 5%.

Controlling for Common History, Religious and LinguisticDistance

TABLE VIICONTROLLING FOR COMMON HISTORY, LINGUISTIC DISTANCE, AND RELIGIOUS DISTANCE (TWO-WAY CLUSTERED STANDARD ERRORS)

(2) (3) (4) (5) (6)Colonial Linguistic Religious Religious + Baseline (7)

(1) history distance, distance, linguistic, (smaller % cognate,Baseline controls weighted weighted weighted sample) plurality

FST gen. dist. relative 6.312 6.283 5.827 5.702 5.557 6.853 5.995to the United States, weighted (0.988)∗∗ (0.988)∗∗ (0.944)∗∗ (0.950)∗∗ (0.940)∗∗ (2.116)∗∗ (2.109)∗∗

=1 if countries were or −0.217 −0.223 −0.209 −0.214 −0.262 −0.196are the same country (0.088)∗∗ (0.087)∗∗ (0.087)∗∗ (0.087)∗∗ (0.084)∗∗ (0.090)∗∗

=1 for pairs ever in 0.304 0.255 0.307 0.282 0.109 0.167colonial relationship (0.131)∗∗ (0.134)∗ (0.101)∗∗ (0.106)∗∗ (0.112) (0.119)

=1 for common colonizer −0.226 −0.214 −0.135 −0.142 −0.046 −0.038post-1945 (0.066)∗∗ (0.063)∗∗ (0.060)∗∗ (0.059)∗∗ (0.111) (0.082)

=1 for pairs currently in −1.033 −0.823 −0.969 −0.873 −0.720 −0.444colonial relationship (0.193)∗∗ (0.200)∗∗ (0.167)∗∗ (0.176)∗∗ (0.162)∗∗ (0.179)∗∗

Linguistic distance index, 0.815 0.409relative to United States, weighted (0.204)∗∗ (0.292)

Religious distance index, 1.373 1.172relative to United States, weighted (0.266)∗∗ (0.317)∗∗

1 − % cognate, relative to 0.631United States, plurality (0.185)∗∗

Constant 0.675 0.740 0.849 0.703 0.763 1.053 0.928(0.263)∗∗ (0.257)∗∗ (0.246)∗∗ (0.250)∗∗ (0.246)∗∗ (0.179)∗∗ (0.188)∗∗

Standardized beta (%) 33.41 33.26 30.84 30.18 29.42 23.58 20.63R2 .13 .14 .16 .17 .18 .14 .19

Note. Dependent variable: absolute value of log income differences, 1995. Two-way clustered standard errors in parentheses. 9,316 observations from 137 countries in columns(1)–(5), 1,830 observations from 61 countries in columns (6) and (7). All columns include geographic controls, that is, absolute difference in latitudes, absolute difference in longitudes,geodesic distance, dummy for contiguity, dummy = 1 if either country is an island, dummy = 1 if either country is landlocked, dummy = 1 if pair shares at least one sea or ocean,freight rate for surface transport (estimates not reported).∗Significant at 10%.∗∗Significant at 5%.

Controlling for Common History, Religious and LinguisticDistance

TABLE VIICONTROLLING FOR COMMON HISTORY, LINGUISTIC DISTANCE, AND RELIGIOUS DISTANCE (TWO-WAY CLUSTERED STANDARD ERRORS)

(2) (3) (4) (5) (6)Colonial Linguistic Religious Religious + Baseline (7)

(1) history distance, distance, linguistic, (smaller % cognate,Baseline controls weighted weighted weighted sample) plurality

FST gen. dist. relative 6.312 6.283 5.827 5.702 5.557 6.853 5.995to the United States, weighted (0.988)∗∗ (0.988)∗∗ (0.944)∗∗ (0.950)∗∗ (0.940)∗∗ (2.116)∗∗ (2.109)∗∗

=1 if countries were or −0.217 −0.223 −0.209 −0.214 −0.262 −0.196are the same country (0.088)∗∗ (0.087)∗∗ (0.087)∗∗ (0.087)∗∗ (0.084)∗∗ (0.090)∗∗

=1 for pairs ever in 0.304 0.255 0.307 0.282 0.109 0.167colonial relationship (0.131)∗∗ (0.134)∗ (0.101)∗∗ (0.106)∗∗ (0.112) (0.119)

=1 for common colonizer −0.226 −0.214 −0.135 −0.142 −0.046 −0.038post-1945 (0.066)∗∗ (0.063)∗∗ (0.060)∗∗ (0.059)∗∗ (0.111) (0.082)

=1 for pairs currently in −1.033 −0.823 −0.969 −0.873 −0.720 −0.444colonial relationship (0.193)∗∗ (0.200)∗∗ (0.167)∗∗ (0.176)∗∗ (0.162)∗∗ (0.179)∗∗

Linguistic distance index, 0.815 0.409relative to United States, weighted (0.204)∗∗ (0.292)

Religious distance index, 1.373 1.172relative to United States, weighted (0.266)∗∗ (0.317)∗∗

1 − % cognate, relative to 0.631United States, plurality (0.185)∗∗

Constant 0.675 0.740 0.849 0.703 0.763 1.053 0.928(0.263)∗∗ (0.257)∗∗ (0.246)∗∗ (0.250)∗∗ (0.246)∗∗ (0.179)∗∗ (0.188)∗∗

Standardized beta (%) 33.41 33.26 30.84 30.18 29.42 23.58 20.63R2 .13 .14 .16 .17 .18 .14 .19

Note. Dependent variable: absolute value of log income differences, 1995. Two-way clustered standard errors in parentheses. 9,316 observations from 137 countries in columns(1)–(5), 1,830 observations from 61 countries in columns (6) and (7). All columns include geographic controls, that is, absolute difference in latitudes, absolute difference in longitudes,geodesic distance, dummy for contiguity, dummy = 1 if either country is an island, dummy = 1 if either country is landlocked, dummy = 1 if pair shares at least one sea or ocean,freight rate for surface transport (estimates not reported).∗Significant at 10%.∗∗Significant at 5%.

Introduction Model and Theory Empirics Conclusions

Controlling for Common History, Religious and LinguisticDistance

Results

Common History : Reduces income differences

(exception: Acemoglu?)

Religious Distance : Increases income differences

Linguistic Distance : Increases income differences(not when religion controlled!)

Bottom Line : Controls are SSS (sign, significance, size).Still genetic distance is robust!

Introduction Model and Theory Empirics Conclusions

Controlling for Common History, Religious and LinguisticDistance

Results

Common History : Reduces income differences(exception: Acemoglu?)

Religious Distance : Increases income differences

Linguistic Distance : Increases income differences(not when religion controlled!)

Bottom Line : Controls are SSS (sign, significance, size).Still genetic distance is robust!

Introduction Model and Theory Empirics Conclusions

Controlling for Common History, Religious and LinguisticDistance

Results

Common History : Reduces income differences(exception: Acemoglu?)

Religious Distance : Increases income differences

Linguistic Distance : Increases income differences(not when religion controlled!)

Bottom Line : Controls are SSS (sign, significance, size).Still genetic distance is robust!

Introduction Model and Theory Empirics Conclusions

Controlling for Common History, Religious and LinguisticDistance

Results

Common History : Reduces income differences(exception: Acemoglu?)

Religious Distance : Increases income differences

Linguistic Distance : Increases income differences

(not when religion controlled!)

Bottom Line : Controls are SSS (sign, significance, size).Still genetic distance is robust!

Introduction Model and Theory Empirics Conclusions

Controlling for Common History, Religious and LinguisticDistance

Results

Common History : Reduces income differences(exception: Acemoglu?)

Religious Distance : Increases income differences

Linguistic Distance : Increases income differences(not when religion controlled!)

Bottom Line : Controls are SSS (sign, significance, size).Still genetic distance is robust!

Introduction Model and Theory Empirics Conclusions

Controlling for Common History, Religious and LinguisticDistance

Results

Common History : Reduces income differences(exception: Acemoglu?)

Religious Distance : Increases income differences

Linguistic Distance : Increases income differences(not when religion controlled!)

Bottom Line : Controls are SSS (sign, significance, size).Still genetic distance is robust!

Introduction Model and Theory Empirics Conclusions

Controlling for Common History, Religious and LinguisticDistance

Motivations

Idea :Language and Religion transmitted vertically.

Conquests, Conversions and Migrations ⇒ Language,Religion and Gene replacement.Without disruptive events ⇒ coefficients would be

lower!

Bottom Line : Genetic distance captures elements other than

Geography, Religion, Language, Common History!

Critique : What if they controlled for Culture and Institutions?

Introduction Model and Theory Empirics Conclusions

Controlling for Common History, Religious and LinguisticDistance

Motivations

Idea :Language and Religion transmitted vertically.Conquests, Conversions and Migrations ⇒ Language,Religion and Gene replacement.

Without disruptive events ⇒ coefficients would be

lower!

Bottom Line : Genetic distance captures elements other than

Geography, Religion, Language, Common History!

Critique : What if they controlled for Culture and Institutions?

Introduction Model and Theory Empirics Conclusions

Controlling for Common History, Religious and LinguisticDistance

Motivations

Idea :Language and Religion transmitted vertically.Conquests, Conversions and Migrations ⇒ Language,Religion and Gene replacement.Without disruptive events ⇒ coefficients would be

lower!

Bottom Line : Genetic distance captures elements other than

Geography, Religion, Language, Common History!

Critique : What if they controlled for Culture and Institutions?

Introduction Model and Theory Empirics Conclusions

Controlling for Common History, Religious and LinguisticDistance

Motivations

Idea :Language and Religion transmitted vertically.Conquests, Conversions and Migrations ⇒ Language,Religion and Gene replacement.Without disruptive events ⇒ coefficients would be

lower!

Bottom Line : Genetic distance captures elements other than

Geography, Religion, Language, Common History!

Critique : What if they controlled for Culture and Institutions?

Introduction Model and Theory Empirics Conclusions

Controlling for Common History, Religious and LinguisticDistance

Motivations

Idea :Language and Religion transmitted vertically.Conquests, Conversions and Migrations ⇒ Language,Religion and Gene replacement.Without disruptive events ⇒ coefficients would be

lower!

Bottom Line : Genetic distance captures elements other than

Geography, Religion, Language, Common History!

Critique : What if they controlled for Culture and Institutions?

Consistency Over Time

TABLE VIIIREGRESSIONS USING HISTORICAL INCOME DATA (TWO-WAY CLUSTERED STANDARD ERRORS)

(1) (2) (3) (4) (5) (6) (7)Income Income Income Income Income Income Income

1500 1700 1820 1870 1913 1960 1995

Relative FST genetic distance to 2.059 2.788the English, 1500 match (0.479)∗∗ (0.515)∗∗

FST genetic distance relative to 0.671 1.684 1.967 3.503 4.948the English, weighted (0.338)∗∗ (0.846)∗∗ (0.924)∗∗ (0.784)∗∗ (0.785)∗∗

Absolute difference in 0.233 0.690 1.034 1.188 1.286 1.201 0.527latitudes (0.124)∗ (0.180)∗∗ (0.199)∗∗ (0.274)∗∗ (0.263)∗∗ (0.244)∗∗ (0.245)∗∗

Absolute difference in 0.040 0.164 0.525 0.692 0.950 0.742 0.420longitudes (0.075) (0.085)∗ (0.144)∗∗ (0.267)∗∗ (0.261)∗∗ (0.248)∗∗ (0.239)∗

Geodesic distance −0.015 −0.082 −0.096 −0.124 −0.175 −0.171 −0.087(1,000s of km) (0.023) (0.025)∗∗ (0.033)∗∗ (0.064)∗ (0.084)∗∗ (0.065)∗∗ (0.040)∗∗

=1 for contiguity −0.051 −0.168 −0.226 −0.257 −0.272 −0.102 −0.466(0.047) (0.054)∗∗ (0.053)∗∗ (0.048)∗∗ (0.049)∗∗ (0.064) (0.064)∗∗

=1 if either country is an −0.069 0.003 −0.067 0.070 0.062 −0.010 0.177island (0.031)∗∗ (0.044) (0.029)∗∗ (0.099) (0.088) (0.073) (0.095)∗

=1 if either country is −0.042 −0.018 0.136 0.173 0.217 0.125 0.083landlocked (0.032) (0.063) (0.037)∗∗ (0.078)∗∗ (0.081)∗∗ (0.089) (0.075)

=1 if pair shares at least −0.027 −0.045 −0.009 0.070 0.118 0.082 −0.011one sea or ocean (0.045) (0.067) (0.042) (0.049) (0.047)∗∗ (0.061) (0.067)

Freight rate −0.005 1.727 1.098 1.668 3.072 4.600 1.362(surface transport) (0.863) (1.187) (1.045) (2.859) (4.374) (3.331) (1.584)

Constant 0.249 0.051 0.139 0.100 −0.066 −0.250 0.663(0.149)∗ (0.170) (0.192) (0.471) (0.689) (0.526) (0.267)∗∗

Introduction Model and Theory Empirics Conclusions

Consistency Over Time

Results

Genetic distance significant over centuries

1820-1870 and 1913-1995 ⇒ increased size of coefficientWhy? Increased importance of economic diffusion!

Introduction Model and Theory Empirics Conclusions

Consistency Over Time

Results

Genetic distance significant over centuries

1820-1870 and 1913-1995 ⇒ increased size of coefficient

Why? Increased importance of economic diffusion!

Introduction Model and Theory Empirics Conclusions

Consistency Over Time

Results

Genetic distance significant over centuries

1820-1870 and 1913-1995 ⇒ increased size of coefficientWhy? Increased importance of economic diffusion!

European Subsample ITABLE IX

RESULTS FOR THE EUROPEAN DATA SET (TWO-WAY CLUSTERED STANDARD ERRORS)

(1) (2)No controls, No controls, (3) (4)

simple genetic relative genetic Add 1870distance distance geography income data

FST genetic distance 28.134in Europe (14.605)∗

FST genetic distance, 45.222 39.333 39.842relative to the English (22.193)∗∗ (18.708)∗∗ (11.052)∗∗

Absolute difference in −0.800 0.467latitudes (0.723) (1.397)

Absolute difference in 0.233 1.022longitudes (0.129)∗ (1.171)

Geodesic distance −0.344 −0.150(1,000s of km) (0.306) (0.177)

=1 for contiguity −0.136 −0.204(0.073)∗ (0.063)∗∗

=1 if either country is −0.078 0.039an island (0.087) (0.086)

=1 if pair shares at −0.159 −0.063least one sea or ocean (0.137) (0.070)

Average elevation −0.028 −0.049between countries (0.223) (0.141)

Freight rate 16.532 −4.004(surface transport) (14.387) (5.938)

=1 if either country is 0.074 a

landlocked (0.178)Constant 0.378 0.382 −2.079 1.130

(0.099)∗∗ (0.084)∗∗ (2.293) (0.947)# of observations 325 325 325 171# of countries 26 26 26 19Standardized beta (%) 31.69 39.80 34.61 59.28R2 .10 .16 .21 .39

Notes. Dependent variable: Difference in log per capita income across pairs (in 1995 for columns (1)-(3),in 1870 for column (4)). Two-way clustered standard errors in parentheses. aDropped due to singularity.∗Significant at 10%.∗∗Significant at 5%.

European Subsample IITABLE X

CONTROLLING FOR RELIGIOUS AND LINGUISTIC DISTANCE IN THE EUROPE DATA SET

(TWO-WAY CLUSTERED STANDARD ERRORS)

(2)Linguistic (3)

and Baseline (4)(1) religious (smaller % cognate,

Baseline distance sample) plurality

FST genetic distance, 41.691 42.485 44.252 44.096relative to the English (18.875)∗∗ (19.310)∗∗ (20.209)∗∗ (20.288)∗∗

Linguistic distance, −0.224plurality, relative to (0.109)∗∗

EnglishReligious distance, 0.107

plurality, relative to (0.171)Protestants

1 − % cognate, plurality, 0.045relative to English (0.186)

Constant −1.537 −1.445 −1.339 −1.314(2.025) (1.973) (2.161) (2.231)

# of observations 300 300 276 276# of countries 25 25 24 24Standardized beta (%) 37.55 38.26 39.52 39.38R2 .21 .22 .25 .25

Notes. Dependent variable: absolute value of log income differences, 1995. Two-way clustered standarderrors in parentheses. All columns include the following controls (estimates not reported): absolute differencein latitudes, absolute difference in longitudes, geodesic distance, dummy for contiguity, dummy = 1 if eithercountry is landlocked, dummy = 1 if pair shares at least one sea or ocean, average elevation between countries,freight rate (surface transport). Compared to Table IX, in columns (1) and (2) Iceland is dropped due to missingdata on linguistic and religious distance from Fearon. In columns (4) and (5) Hungary and Finland are droppedbecause their languages are not Indo-European, and thus not part of the lexicostatistical data set.∗Significant at 10%.∗∗Significant at 5%.

Introduction Model and Theory Empirics Conclusions

Conclusions

Genetic distance matters for economic differentials:Barriers to diffusion

Channel for intergenerational transmission of characteristics:Culture

Policy implications: β? Remember: de(i , j) ≡ |yj − yi | = β∆|dv (i , f )− dv (j , f )|

Introduction Model and Theory Empirics Conclusions

Conclusions

Genetic distance matters for economic differentials:Barriers to diffusion

Channel for intergenerational transmission of characteristics:Culture

Policy implications: β? Remember: de(i , j) ≡ |yj − yi | = β∆|dv (i , f )− dv (j , f )|

Introduction Model and Theory Empirics Conclusions

Conclusions

Genetic distance matters for economic differentials:Barriers to diffusion

Channel for intergenerational transmission of characteristics:Culture

Policy implications: β

? Remember: de(i , j) ≡ |yj − yi | = β∆|dv (i , f )− dv (j , f )|

Introduction Model and Theory Empirics Conclusions

Conclusions

Genetic distance matters for economic differentials:Barriers to diffusion

Channel for intergenerational transmission of characteristics:Culture

Policy implications: β? Remember: de(i , j) ≡ |yj − yi | = β∆|dv (i , f )− dv (j , f )|

Introduction Model and Theory Empirics Conclusions

Conclusions

Is there anything new under thesun?