IZA DP No. 11554: The Origins of the Division of Labor in Pre-Modern Times
This research explores the historical roots of the division of labor in pre-modern societies. It advances the hypothesis and establishes empirically that intra-ethnic diversity had a positive effect on the division of labor across ethnicities in the pre-modern era. Exploiting a variety of identification strategies and a novel ethnic level dataset combining geocoded ethnographic, linguistic and genetic data, it establishes that higher levels of intra-ethnic diversity were conducive to economic specialization in the pre-modern era. The findings are robust to a host of geographical, institutional, cultural and historical confounders, and suggest that variation in intra-ethnic diversity is the main predictor of the division of labor in pre-modern times.