Geography, land inequality and regional numeracy in Europe in historical perspective

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.

The long-run impact of human capital on innovation and economic development in the regions of Europe

“…Similarly, the authors mention that rent extraction can lead to the effect that those elites which had (partly) been at the origin of a lack of development in some regions, could use public subsidies for themselves, entrenching a lower level of economic prosperity even further. In a historical context, for example, Baten and Hippe (2017) show that large landlords have historically played an important role in delaying human capital formation and thus economic development in some parts of Europe, with repercussions which can still be seen today. In consequence, it appears crucial not to neglect long-term factors and evolutions that have key implications for today's economic development.…”

“…Numeracy is measured by the age heaping method which has been used in an increasing number of recent publications (A'Hearn, Crayen, and Baten 2009;Manzel and Baten 2009;Crayen and Baten 2010;Hippe 2012b;Hippe and Baten 2012;Baten and Hippe 2017;Diebolt, Hippe, and Jaoul-Grammare 2017).…”

No direct taxation without new elite representation: Industrialization and the domestic politics of taxation

“…In line with recent research emphasizing intra-elite competition in democratization and state-building processes (e.g., Ansell & Samuels 2014), we therefore do not expect increased government revenue to have resulted in redistributive spending. Instead, additional government resources flew into spending on public policies with positive economic benefits such as infrastructure development and public education (Lizzeri & Persico 2004;Galor et al 2009;Aidt et al 2010;Baten & Hippe 2018). Hence, while we also expect to find a conditional effect of political competition on overall taxation, we expect to find a particularly strong effect on direct forms of taxation.…”

“…1 Industrialization led to the emergence of new economic elites linked to commerce and industrial forms of production. These new elites had an interest in expanding fiscal capacity to fund public goods that contribute to improving economic productivity and state building, most notably infrastructure development and public education (Ardant 1975;Lizzeri & Persico 2004;Galor et al 2009;Aidt et al 2010;Baten & Hippe 2018;Beramendi et al 2019). 2 Unsurprisingly, these new elites also challenged the old elites' claim to power (Tilly 2004;Ziblatt 2008;Ansell & Samuels 2014).…”

Political equality and quality of government

“…For example, Erickson & Vollrath (2004) find in a sample of developing and developed countries that lower land inequality across agricultural populations is associated with higher public provision of education. Using historical data for the United States and several European countries, Galor et al (2009) and Baten & Hippe (2018) show that inequality in land distribution is negatively correlated with the investment in education. These findings, however, contrast with those obtained by Gray & Clark (2014) and Goni (2016), who reject the effect of land inequality on human capital formation for England.…”