Does It Matter Where You Came From? Ancestry Composition and Economic Performance of U.S. Counties, 1850-2010

Abstract

The United States provides a unique laboratory for understanding how the cultural, institutional, and human capital endowments of immigrant groups shape economic outcomes. In this paper, we use census micro-samples to reconstruct the country-of-ancestry composition of the population of U.S. counties from 1850 to 2010 and describe its evolution. We also develop a county-level measure of GDP per worker over the same period. Using this novel panel data set, we show that the evolution of a county’s ancestry composition is significantly associated with changes in county-level GDP. The cultural, institutional, and human capital endowments from the country of origin drive this relationship. We also use an instrumental variable strategy to identify the effect of endowments on local economic development. Finally, our results suggest that while ancestry diversity is positively related to county GDP, diversity in attributes is negatively related to county GDP. We show that part of this relationship is explained by the close link between occupational variety and ancestry diversity.

Keywords: Immigration, Ethnicity, Ancestry, Economic Development, Culture, Institutions, Human Capital

JEL Classification: J15, N31, N32, O10, Z10