Ancestral History Explains Roots Of Income Inequality

This could explain the intense interest in genealogy that some people
have, if you aren't from here why aren't you rich? My monetary status
must be explained by the fact I can only reach back about 400 years.



Ancestral History Explains Roots Of Income Inequality

ScienceDaily (Dec. 17, 2008) — Two Brown University economists have
created a new data set explaining differences in the world’s current
per capita gross domestic products (GDPs). In a National Bureau of
Economic Research working paper, Louis Putterman and David N. Weil
introduce a “World Migration Matrix” showing that inequality among
countries can be largely explained by where the ancestors of each
country’s people lived some 500 years ago. “What matters is the
history of the people who live in a country today, more than the
history of the country itself,” they say.

The World Migration Matrix is some of the first economic growth data
to account for great population movements of the last half-millennium.
For 165 countries, the matrix identifies where the ancestors of the
permanent residents were living in the year 1500. The data
illustrates how today’s countries are extremely diverse in terms of
immigration. For example, the fraction of ancestors for today’s
population who lived in their present country in 1500 is:

* 3 percent for the United States, Canadia, Australia, and New
Zealand;
* 94 to 98 percent for Southeast Asia, South Asia, and East Asia;
* 94 percent for Europe;
* 89 percent for North Africa and West and Central Asia;
* 65 percent for Mexico and Central America;
* 20 percent for South America;
* 0 percent for the Caribbean.

When Putterman and Weil used the matrix to investigate the effects of
the post-1500 population movements on income differences today, the
results were “almost breathtaking.” The power of regional origins is
illustrated by the fact that in a 125-country regression, 44 percent
of the variance in current per capita GDP is accounted for by entering
only the share of the population’s ancestors that lived in Europe in
1500.

Putterman and Weil say their findings are in line with other studies
that find centuries-long persistence in the impact of other growth
determinants, including the long-standing presence of state-level
polities, the early transition to agriculture, and early advancement
with respect to technologies like writing and number systems. But when
Putterman and Weil examine these early indicators — then adjust for
the origin of nations’ current populations — the impact on today’s
incomes becomes even stronger.

More precisely, state history and year of agricultural transition
explain less than 10 percent of the variance in today’s country
incomes; corrected for post-1500 population shifts, either variable
can explain about a quarter of that variance. Accounting for
population origins in those countries having large non-indigenous
population shares, like the countries of the Americas, Oceania, Taiwan
and Singapore, provides a substantially more accurate window into the
persistence of past advantages.

The research builds on work published by Putterman this month in
Economica, asserting that early agriculture development has long-term
consequences on a country’s economic growth. In “Agriculture,
Diffusion and Development: Ripple Effects of the Neolithic
Revolution,” Putterman created new, country-specific estimates of the
timing of agricultural transition for 160 counties, the oldest dating
back 10,500 years (Jordan and Israel). He demonstrated tht the number
of years since a society made the transition from hunting and
gathering to agriculture is highly correlated to the level of income
in the country today. That is, the earlier the agriculture
development, the higher the income.

But as Putterman and Weil’s later work shows, history’s influence on
economic capabilities is not limited to the locations in which
innovations first took place because technologies and social
capabilities can be transferred from one place to another — including
by migrations such as those that have remade the globe since the 15th-
century encounter between the Old and New worlds.

Putterman and Weil reflect on the implications of this work in a
column on Vox.com, a Web site featuring research-based policy analysis
and commentary from leading economists:

“First, if this influence is indeed as significant as our findings
suggest it to be, then efforts to sort out the roles that geographic,
institutional, and other factors play in explaining income levels and
growth rates may produce misleading results unless we properly control
for it.

“Second, the influence of population origins suggests that there is
something that human families and communities transmit from generation
to generation — perhaps a form of economic culture, a set of attitudes
or beliefs, or informally transmitted capabilities — that is of at
least similar importance to economic success as are more widely
recognized factors like quantities of physical capital and even human
capital in the narrower sense of formal schooling. If we understand
which culturally transmitted factors are important and what
contributes to their emergence and propagation, we might be able to
design policy interventions that could help less successful groups and
countries to close their developmental gaps.”

Putterman and Weil are both professors of economics at Brown
University. Weil is also a research associate of the National Bureau
of Economic Research and Brown’s Population Studies Training Center,
and Putterman is a faculty associate of Brown’s Watson Institute for
International Studies.
Adapted from materials provided by Brown University.
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http://www.sciencedaily.com­; /releases/2008/12/081216114106.htm
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