
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.