Examination of the Engerman-Sokoloff Hypothesis

Recent research argues that among former New World colonies a nation’s past dependence on slave labor was important for its sub-sequent economic development (Engerman and Sokoloff, 1997, 2002, 2006; Sokoloff and Engerman, 2000). These studies argue that special-ization in plantation agriculture based on slave labor caused economic inequality, which concentrated power in the hands of a small elite, ad-versely affecting the development of domestic institutions needed for sustained economic growth. I test for these relationships looking both across former New World economies and across states and counties within the U.S. I find evidence that slave use is negatively correlated with subsequent economic development. However, I do not find evi-dence that this negative relationship is driven by large scale plantation slavery, or that the relationship works through slavery’s effect on eco-nomic inequality