 This paper examines the effect of human capital on long-run development by exploiting variation from a State policy that attracted educated immigrants into state sponsored settlements during the era of mass migration in Brazil. We show that immediately after the establishment of settlements, the population living in these areas had higher educational levels than elsewhere in the state. At that moment, settlements were still similar to other areas, but for educational levels. In 1940 and 2000, after settlements had ceased to exist, populations living in these areas continued to be more educated. Local communities that developed from settlements used more educational inputs throughout the period and, over time, shifted occupations towards human capital intensive activities. In 2000, areas corresponding to previous settlements had income per capita 15\% higher than the remainder of the state. The evidence indicates that the educational composition of immigrants persisted through time and led, in the long run, to higher levels of development.