Human capital transfers and sub-national development: Armenian and Greek legacy in post-expulsion Turkey

Abstract

Can the economic legacy of highly skilled groups persist long after they were uprooted from their homelands? To answer this question, we study long-term sub-national development in Turkey after the mass expulsions of the Armenian and Greek communities of the Ottoman Empire in the early 20th century. Since these events led to an almost complete and permanent removal of both communities from Turkey within a short time period, they provide a unique quasi-natural experiment that rules out any direct minority influence on development in the post-expulsion period. By exploiting local variations in historical minority population shares and community buildings across modern districts and villages/neighborhoods within each district, we document a sizable Armenian and Greek legacy effect on contemporary measures of economic development. We argue that this persistent influence is grounded on the significant contribution of Armenian and Greek communities to human capital accumulation among Muslims. We show evidence that inter-group transfers of skills and knowledge were instrumental in this process, leading to greater human capital among Muslims in minority regions both in the past and today.