E2016012                                                              October 2016

Jingheng Li、Tianyang Xi、Yang Yao

Abstract:

The ideas of political leaders play a fundamental role in shaping economic policies. In this paper, we empirically examine how economic liberalization is affected by leaders' educational backgrounds, which we interpret as a major source of ideas. Relying on a data set about economic liberalizations in over 140 countries and originally collected data on national leaders, we find strong effects of leaders' education on promoting liberalization. The effects are most telling for leaders with majors in economics and natural science. Falsification tests show that the results are unlikely to be driven by unobservable factors that simultaneously give rise to liberalization and the selection of highly educated leaders.

Exploring the sample of random leadership transitions attest to the baseline results. We also show the robustness of estimates by considering partisan affiliation, political institutions, public opinion, and geopolitics as alternative channels.

Keywords: Political leaders, Education, Economic liberalization, Ideas versus interests

JEL: E61, H11, M12, O20

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