Forced Coexistence and Economic Development: Evidence From Native American Reservations

Abstract

Studying Native American reservations, and their historical formation, I find that their forced integration of autonomous polities into a system of shared governance had large negative long‐run consequences, even though the affected people were ethnically and linguistically homogenous. Reservations that combined multiple sub‐tribal bands when they were formed are 30% poorer today, even when conditioning on pre‐reservation political traditions. The results hold with tribe fixed effects, identifying only off within‐tribe variation across reservations. I also provide estimates from an instrumental variable strategy based on historical mining rushes that led to exogenously more centralized reservations. Data on the timing of economic divergence and on contemporary political conflict suggest that the primary mechanism runs from persistent social divisions through the quality of local governance to the local economic environment.

On the Ethnic Origins of African Development: Chiefs and Precolonial Political Centralization

“…Focusing on North America, Dippel (2014) shows a strong positive correlation between the degree of pre-colonial political centralization of indigenous tribes and contemporary development across indigenous Native American Reservations. Focusing on Latin America Chiovelli (2014) documents a positive correlation between pre-colonial institutions and contemporary levels of development, as measured by light density at night and population density.…”

Growing Up without Finance

“…Within this literature, our paper is most directly related to research that studies the consequences of institutional variation across Native American reservations (e.g., Karpoff and Rice 1989;Dippel 2014). The closest paper is Brown, Cookson, and Heimer (2017), which finds that stronger contract enforcement from PL280 led to an expansion of small business lending and bank branching on reservations, and that these effects translate into higher economic output in finance-dependent industries.…”

Jurisdiction, Crime, and Development: The Impact of Public Law 280 in Indian Country

“…μ i is the time-invariant component of the error term. μ i captures county-level, time-invariant ("fixed") factors that we do not directly control for, such as, for example, the availability of natural resources and other geography-based determinants of economic development (Anderson & Parker 2008), historical determinants of reservations formation (Anderson & Lueck 1992;Dippel 2011), tribal culture and governance mechanisms (Akee, Jorgensen, & Sunde 2012;Cornell & Kalt 2000;Pickering 2004), as well as the constituency's-local authorities' and tribes'willingness to adopt PL280. Under this fixed effects specification, consistent estimates of parameters are obtained even when the time-invariant, county-level unobserved heterogeneity μ i is correlated with the right-hand-side variables in equation (4).…”

“…Anderson and Lueck (1992),Vinje (1996),Cornell and Kalt (2000),Pickering and Mushinski (2001),Evans and Topoleski (2002),Dippel (2011), and Akee, Jorgensen, and Sunde (2012) empirically examine the determinants of economic development of American Indians and emphasize institutional factors, but do not focus on PL280.…”