Abstract:

Although the negative impact of slavery has been documented for exporting African nations, less is known about the long-term impact of this institution in receiving nations. This article examines the long-term effects of slavery on the receiving end of the spectrum, by focusing on Brazil, one of the largest importers of slaves and the last country to abolish this institution

in the Western Hemisphere. To deal with the endogeneity of slavery placing, we use a spatial Regression Discontinuity framework, exploiting the colonial boundaries between the Portuguese and Spanish empires in current day Brazil. We find that the number of slaves in 1872 is discontinuously higher in the Portuguese side of the border, consistent with this power’s comparative advantage in this trade. We then show how this differential slave rate has led to higher income inequality of 0.103 points (Gini coefficient), approximately 20% of average income inequality in Brazil. To further investigate the role of slavery on economic development, we use the division of the Portuguese colony into Donatary Captancies. We find that a 1% increase in slavery in 1872 leads to an increase in inequality of 0.112. Aside from the general effect on inequality, we find that more slave intensive areas have higher income and educational racial imbalances and worse public institutions today.

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