TD n. 640 2015

Rudi Rocha, Claudio Ferraz, Rodrigo Reis Soares.

This paper examines the role of human capital persistence in explaining long-term

development. We exploit variation induced by a state-sponsored settlement policy

that attracted a pool of immigrants with higher levels of schooling to particular regions

of Brazil in the late 19th and early 20th century. We show that municipalities that

received settlements experienced increases in schooling that persisted over time. One

century after the policy, localities that received state-sponsored settlements had higher

levels of schooling and income per capita. We provide evidence that long-run effects

were driven by persistently higher supply and use of educational inputs and shifts in

the structure of occupations towards skill-intensive sectors