Decent Essays
In a recent study, Nunn (2008) examines the long-term impacts of Africa’s slave trade. He finds that the slave trade, which occurred over a period of more than 400 years, had a significant negative effect on long-term economic development. Although the paper arguably identifies a negative causal relationship between the slave trade and income today, the analysis is unable to pin down the exact causal mechanisms underlying the reduced form relationship documented in the paper. In this paper, we examine one of the channels through which the slave trade may affect economic development today. Using fine-grained individual-level survey data, we test whether the slave trade caused a culture of mistrust to develop within Africa. Early in…show more content…
One strategy we pursue is to use the historic distance from the coast of an ethnic group as an instrument for the number of slaves taken from that ethnic group. There is ample historical evidence suggesting that the instrument is relevant, but it is far less clear that it satisfies the necessary exclusion restriction. The most likely reason why the exclusion restriction may fail is that the historic distance from the coast of an individual’s ancestors is correlated with the current distance from the coast of the respondent, and this in turn is negatively correlated with income (Rappaport and Sachs, 2003), which is positively correlated with trust (Alesina and La Ferrara, 2002).1 For this reason, in our IV estimates, where we use the historic distance from the coast of a respondent’s ancestors as an instrument, we also control for the respondent’s current distance from the coast. The IV estimation produces estimates very similar to the OLS estimates. They provide evidence that the slave trade caused the descendants of those targeted by the trade to be less trusting today. As is generally the case with instruments, it is possible that despite our second stage controls, our instrument still does not satisfy the necessary exclusion restriction. For this reason, we also perform a number of falsification exercises to assess the validity of our identification strategy. We 1Note that
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