Abstract
We find a relationship between geographic factors and numeracy in more than 300 regions of Europe around the year 1900. We argue that the distribution of land ownership is a plausible mechanism, given that it is related to the geographic factors under study. Consistent with theoretical studies in the Unified Growth Theory framework, we find that inequality in land distribution has a negative correlation with human capital formation as landowners did not have incentives to promote educational institutions or were not willing to pay the necessary taxes. This study explains a substantial share of the differences in development gradients between rural European regions in a historical perspective.
Highlights
Geography has often been considered as a potential factor implying that biogeographical characteristics that were conducive for the onset of the Neolithic Revolution (Diamond 1997) and the disease environment (Sachs and Warner 1999) have had a persistent effect on comparative economic development across regions
Sugar suitability is clearly negative in its impact, we should note that, in reality, 15 More precisely, data are available on NUTS 3 for the former regions of Austria–Hungary (i.e., Austria, Croatia, the Czech Republic, Hungary, Slovakia, Slovenia and parts of Italy, Poland, Romania, Ukraine and Serbia), France and Spain, in addition to on NUTS 2 for Italy and the UK
How important were the different size categories? For the countries in rural southern and eastern Europe that were most relevant for the land inequality effect, the land shares of small farms and very large farms were substantial: 36% of land was held by farms of less than 20 ha, and 52% was held by very large farms of 100 ha and more (Appendix Table A.5)
Summary
Geography has often been considered as a potential factor implying that biogeographical characteristics that were conducive for the onset of the Neolithic Revolution (Diamond 1997) and the disease environment (Sachs and Warner 1999) have had a persistent effect on comparative economic development across regions. In a seminal paper, Galor et al (2009, GMV from here) argue that inequality in land distribution has a negative effect on the development of institutions that promote human capital. Inequality in land distribution may be viewed as an obstacle to human capital formation and as a factor in slowing down the process of industrialisation and the generation of economic growth. Distribution and including several control variables, we trace the relationship between land inequality and human capital throughout Europe at the regional level. It is important to use an outcome variable such as numeracy because school inequality was very high in nineteenth century Europe: some local committees hired incapable but inexpensive teachers to fill the schools, but the human capital effect of underpaid and undereducated teachers was negligible (on the difference between school inputs and their effects on mathematical ability, see Hanushek and Woessmann 2012).
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