TY - JOUR AU - Guiso, Luigi AU - Sapienza, Paola AU - Zingales, Luigi TI - Long Term Persistence JF - National Bureau of Economic Research Working Paper Series VL - No. 14278 PY - 2008 Y2 - August 2008 DO - 10.3386/w14278 UR - http://www.nber.org/papers/w14278 L1 - http://www.nber.org/papers/w14278.pdf N1 - Author contact info: Luigi Guiso Axa Professor of Household Finance Einaudi Institute for Economics and Finance Via Sallustiana 62 - 00187 Rome, Italy Fax: 39 06 4792 4858 E-Mail: luigi.guiso55@gmail.com Paola Sapienza Kellogg School of Management Northwestern University 2221 Campus Drive Evanston, IL 60208 Tel: 847/491-7436 Fax: 847/491-5719 E-Mail: paola-sapienza@northwestern.edu Luigi Zingales Booth School of Business The University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-3196 Fax: 773/834-2081 E-Mail: luigi.zingales@ChicagoBooth.edu AB - Is social capital long lasting? Does it affect long term economic performance? To answer these questions we test Putnam's conjecture that today marked differences in social capital between the North and South of Italy were due to the culture of independence fostered by the free city-states experience in the North of Italy at the turn of the first millennium. We show that the medieval experience of independence has an impact on social capital within the North, even when we instrument for the probability of becoming a city-state with historical factors (such as the Etruscan origin of the city and the presence of a bishop in year 1,000). More importantly, we show that the difference in social capital among towns that in the Middle Ages had the characteristics to become independent and towns that did not exists only in the North (where most of these towns became independent) and not in the South (where the power of the Norman kingdom prevented them from doing so). Our difference in difference estimates suggest that at least 50% of the North-South gap in social capital is due to the lack of a free city-state experience in the South. ER -