This article describes and explains a previously overlooked empirical pattern in state revenue collection. As late as 1913, central governments in the West collected similar levels of per capita revenue as the rest of the world, despite ruling richer societies and experiencing a long history of fiscal innovation. Western revenue levels permanently diverged only in the following half-century. We identify the twentieth-century great revenue divergence by constructing a new panel data set of central government revenue with broad spatial and temporal coverage. To explain the pattern, we argue that sustainably high levels of revenue extraction require societal demand for an activist state, and a supply of effective bureaucratic institutions. Neither factor in isolation is sufficient. We formalize this insight in a game-theoretic model. The government can choose among low-effort, legibility-intensive, and crony-favoring strategies for raising revenues. Empirically, our theory accounts for low revenue intake in periods of low demand (the nineteenth-century West) or low bureaucratic capacity (twentieth-century former colonies), and for eventual revenue spikes in the West.

This paper examines two common critiques of ethnic quota policies in government hiring and education: that they do not benefit the target group, and that any benefits are unevenly distributed within the target group. It focuses on the effects of educational and hiring quotas for Other Backward Class (OBC) castes in India, using difference-in-difference and triple difference designs that take advantage of the gradual introduction of these quotas. The results provide little support for these critiques: affirmative action is associated with small increases in educational attainment and government employment among eligible age cohorts, though the increases in government employment may be a result of other social and political trends. These benefits extend even to poorer OBCs (though not the very poorest), and increase the chances of social contact between uneducated OBCs and government officials.

How do historical inequalities influence modern public goods provision? This paper analyses a new panel dataset of local public goods provision in a single North Indian district with observations at the village-decade level going back to 1905 and detailed information on colonial land tenure institutions and demographics. The presence of large colonial landowners is positively associated with rural public goods provision when the landlord was resident in the early 20th century and has a null effect when the landlord was an absentee. Villages inhabited or owned by upper castes had an advantage in the colonial and immediate post-independence eras, but not afterward. The results suggest that within unequal societies, economic and status inequalities can have positive effects on public goods provision when they link elites to extralocal decision-makers.