QJE: Investments in education continue to provide economic benefits two and half centuries later (Michael Simkovic)

A recent article in the Quarterly Journal of Economics (the leading journal in economics) finds evidence that early investments in education in the 1600s through mid 1700s continued to provide economic benefits in the form of persistently higher eduction levels and 10% higher wages and centuries later.  

The study examined the economic performance of communities based on their proximity to Jesuit missions established and subsequently closed hundreds of years ago.  The Jesuits emphasized literacy and job training.  The missions were established in locations that were not particularly desirable in terms of population density, soil fertility, climate, or access to transportation and trade, because Franciscans who arrived earlier claimed the best locations for their missions.  The Jesuits were expelled from the Spanish Empire in 1767, at which point Jesuit missions shut down.

The closer communities were to Jesuit mission, the higher subsequent education levels and earnings, and the quicker communities adopted new technologies.  These benefits persisted for centuries.  The benefits are similar across national boundaries and do not appear to be due to institutional or legal differences.

Proximity to Franciscan missions, which emphasized healthcare and anti-poverty efforts rather than education, did not provide similar benefits.

Felipe Valencia Caicedo; The Mission: Human Capital Transmission, Economic Persistence, and Culture in South America, The Quarterly Journal of Economics, Volume 134, Issue 1, 1 February 2019, Pages 507–556, https://doi-org.libproxy1.usc.edu/10.1093/qje/qjy024

This article examines the long-term consequences of a historical human capital intervention. The Jesuit order founded religious missions in 1609 among the Guaraní, in modern-day Argentina, Brazil, and Paraguay. Before their expulsion in 1767, missionaries instructed indigenous inhabitants in reading, writing, and various crafts. Using archival records, as well as data at the individual and municipal level, I show that in areas of former Jesuit presence—within the Guaraní area—educational attainment was higher and remains so (by 10%–15%) 250 years later. These educational differences have also translated into incomes that are 10% higher today. The identification of the positive effect of the Guaraní Jesuit missions emerges after comparing them with abandoned Jesuit missions and neighboring Franciscan Guaraní missions. The enduring effects observed are consistent with transmission mechanisms of structural transformation, occupational specialization, and technology adoption in agriculture.

The Washington Post has provided a good summary.