Working Paper: CEPR ID: DP6981
Authors: Luigi Guiso; Paola Sapienza; Luigi Zingales
Abstract: Is social capital long lasting? Does it affect long term economic performance? To answer these questions we test Putnam?s conjecture that today marked differences in social capital between the North and South of Italy were due to the culture of independence fostered by the free city-states experience in the North of Italy at the turn of the first millennium. We show that the medieval experience of independence has an impact on social capital within the North, even when we instrument for the probability of becoming a city-state with historical factors (such as the Etruscan origin of the city and the presence of a bishop in year 1,000). More importantly, we show that the difference in social capital among towns that in the Middle Ages had the characteristics to become independent and towns that did not exists only in the North (where most of these towns became independent) and not in the South (where the power of the Norman kingdom prevented them from doing so). Our difference in difference estimates suggest that at least 50% of the North-South gap in social capital is due to the lack of a free city-state experience in the South.
Keywords: culture; economic development; institutions; persistence; social capital
JEL Codes: O10; O43; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| free city-state experience in northern Italy (N93) | current levels of social capital (Z13) |
| historical lack of free city-state experiences in southern Italy (N93) | difference in social capital between northern and southern towns (H73) |
| current levels of social capital (Z13) | per capita income (D31) |