Population Diversity, Division of Labor and the Emergence of Trade and State

Abstract

This research explores the emergence and prevalence of economic specialization and trade in pre-modern societies. It advances the hypothesis, and establishes empirically that population diversity had a positive causal effect on economic specialization and trade. Based on a novel ethnic level dataset combining geocoded ethnographic and genetic data, this research exploits the exogenous variation in population diversity generated by the "Out-of-Africa" migration of anatomically modern humans to causally establish the positive effect of population diversity on economic specialization and the emergence of trade-related institutions, which, in turn, facilitated the historical formation of states. Additionally, it provides suggestive evidence that regions historically inhabited by pre-modern societies with high levels of economic specialization have a larger occupational heterogeneity and are more developed today.

Distance to the pre-industrial technological frontier and economic development

“…where y it is a measure of economic development in period t for country i, d ijt is the number of weeks of travel to the j-th pre-industrial technological frontier in period t, x ijt are additional characteristics of country i in period t (including geography), {δ ci } are a complete set of continen-13 Further supportive evidence of the validity of this method has been provided elsewhere. In particular, as predicted by the Out-of Africa Theory of the dispersion of modern humans, estimated HMI and HMISea migratory distances to East Africa have been shown to have a high explanatory power for the level of expected heterozygocity both at the ethnic and country levels (Ashraf and Galor, 2013;Depetris-Chauvin andÖzak, 2015). Similarly, differences in other cultural values have been linked to these estimated migratory distances (Becker et al, 2014;Depetris-Chauvin andÖzak, 2015;Spolaore and Wacziarg, 2014).…”

“…In particular, as predicted by the Out-of Africa Theory of the dispersion of modern humans, estimated HMI and HMISea migratory distances to East Africa have been shown to have a high explanatory power for the level of expected heterozygocity both at the ethnic and country levels (Ashraf and Galor, 2013;Depetris-Chauvin andÖzak, 2015). Similarly, differences in other cultural values have been linked to these estimated migratory distances (Becker et al, 2014;Depetris-Chauvin andÖzak, 2015;Spolaore and Wacziarg, 2014).…”

“…A potential concern with these results is that they may be capturing the potential confounding effects of other sources of economic development. In particular, the time spent at the MDD may be correlated with geographical characteristics associated with risk attitudes, trust, cooperation and pre-modern states Depetris-Chauvin andÖzak, 2015;Durante, 2009), which may have independently affected development. Similarly, changes in the distance to the pre-industrial technological frontier may be correlated with the religious composition of a country, which in turn may independently affect development.…”