Melissa Dell wins the John Bates Clark medal

WHEN MELISSA DELL was an undergraduate she heard about some economics research that reminded her of a recent trip to Peru. It was no idle daydream. The study, by Daron Acemoglu and Simon Johnson of the Massachusetts Institute of Technology (MIT) and James Robinson of the University of Chicago, argued that colonial institutions could determine economic performance today. Ms Dell wondered whether Peru’s history might explain its extreme poverty. Her answer to the question has helped her win the John Bates Clark Medal, an award given annually by the American Economic Association to an economist under 40.

The colonial institution was the Spanish-imposed “mita” system in Peru and Bolivia, which between 1573 and 1812 forced a seventh of adult men from indigenous communities to work in silver and mercury mines. This was in place in some regions but not others, allowing Ms Dell to measure its effects. Her results supported the findings of Messrs Acemoglu, Johnson and Robinson, that extractive institutions have pernicious and persistent effects. Centuries on, families living just inside mita areas consume 25% less than those just outside them, are less educated and rely more on subsistence farming.

Ms Dell then asked why the mita had such damaging effects. She showed that haciendas, or big agricultural estates, thrived outside...

via The Economist: Finance and economics Business Feeds

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