IZA DP No. 2229: Genetic, Cultural and Geographical Distances
published as 'Genetic Distance, Transportation Costs, and Trade' in: Journal of Economic Geography, 2014, 14 (1), 179-198
This paper investigates how the measures of genetic distance between populations, which have been used in anthropology and historical linguistics, can be used in economics. What does the correlation between genetic distance and economic variables mean? Using the measure of genetic distance, a newly-collected database on transport costs, as well as more refined measures of geography within Europe, we show that i) geography explains both genetic distance and transportation costs between European countries, and ii) genetic distance does not explain economic outcomes once we control for geography. We conclude that genetic distance in economics capture transportation costs between countries and not cultural differences.