Essays on the Economics of Social Capital and Institutions

A growing body of theoretical and empirical work has shown that culture matters for institutions and socio-economic outcomes. This thesis contributes to the growing economic literature that investigates the relationship between cultural norms & values, institutions and socio-economic outcomes. Each of its three chapters presents a separate essay. Chapter 2 reconsiders the relationship between trust and democratisation. Despite extensive literature that investigates the determinants of democratisation, the ques- tion of why some countries develop democratic institutions remain open. Modernisa- tion theory argues that economic growth and development is the driving force behind democratisation (Lipset, 1959). Other segments of the literature have analysed the role of education, natural resources, historical roots and demographic factors. Do cultural values and norms impact democratisation? There is no compelling evidence either for or against. Using a panel of countries from 1989 to 2014, I find a robust negative correlation between trust and democracy. This relationship is robust to controlling for socioeconomic, demographic and historical factors. Chapter 3 investigates the impact of slavery on contemporary trust in Brazil. I combine contemporary trust data from Latino Barometro with historical slavery data from the 1872 Brazilian census. Overall, the results suggest that past slavery does not have a robust effect on current day generalized trust and trust in government. Furthermore, I do not find a negative effect of slavery on trust levels of Brazilians of mixed-race ancestry. Robustness check confirms the results are not driven by immigration, measurement of slave location and municipality age. Chapter 4 investigates the short-term impact of the Portuguese Language Orthographic Reform on students in Brazil and Portugal. The Portuguese Language reform was an international agreement that unified orthography for the Portuguese Language. To measure the impact of the reform, we adopt a difference in differ- ence framework using several waves of PISA (Program for International Student Assessment) data. The results suggest that the reform had a detrimental impact on Portuguese students’ scores, which were more affected by the reform.