Sovereignty, Credible Commitments, and Economic Prosperity on American Indian Reservations

Abstract

American Indian reservations are islands of poverty in a sea of wealth. Because this poverty cannot be explained solely by natural resource, physical, and human capital constraints, institutions are likely to be part of the explanation. One of the institutional variables is the sovereign power of tribes, which allows tribal governments to act opportunistically. The potential for such opportunistic behavior can thwart economic development if tribes are unable to make credible commitments to stable contract enforcement. One avenue for credible commitments is Public Law 280, which required some tribes to turn judicial jurisdiction over civil disputes to the states in which they reside. Using data for 1969-99, we find that per capita income for American Indians on reservations subject to state jurisdiction grew significantly more than it did for Indians who were not. (c) 2008 by The University of Chicago. All rights reserved..

Growing Up without Finance

“…This definition is consistent with other studies on the consequences of PL280 (Anderson and Parker, 2008;Cookson, 2010;Parker, 2012).…”

Legal Institutions, Credit Markets, and Economic Activity

“…We code a reservation as zero if state courts cannot hear civil disputes on the reservation either because the reservation's state never asserted court jurisdiction over native lands, or because PL280 jurisdiction was exempted or retroceded as is outlined in the 1953 law or in the 1968 amendments to the law in the Indian Civil Rights Act. Our categorization of the law is consistent with other studies that have used variation in PL280 civil jurisdiction to study economic outcomes (Anderson and Parker, 2008;Cookson, 2010;Parker, 2012;Cookson, 2014). 8…”

“…Although PL280's contract enforcement implications are not why the law was passed, the introduction of better-understood state courts to reservation institutions has done much to overcome the unease of investors of signing long-term contracts on reservations (e.g., see Anderson and Parker, 2008). Moreover, treatment and control reservations had similar credit market conditions around the time of PL280's passage according to mortgage data in Parker (2012).…”

“…Although a number of recent studies make use of withincountry variation to better understand what drives economic performance (Barro and Sala-i Martin, 1992;Cornell and Kalt, 2000;, and some of these exercises also use the Native American reservation setting (e.g., Anderson and Parker 2008;Dippel 2013;Cookson 2014), our analysis is among the first to trace out the micro-level mechanisms through which regional differences in institutions matter for both financial and real economic activity. As such, our findings and approach should be as interesting to policymakers and Native American scholars, who seek to better understand development near reservations, as they are to scholars studying the institutional underpinnings of cross-national differences in economic performance.…”

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

“…PL280 fundamentally changed the legal regime in areas with an American‐Indian reservation population. Providing both cross‐sectional and time variation in institutions and outcomes within one country, the adoption of PL280 and its consequences offer a fertile ground for empirical research on the impact of institutions and their change (see, e.g., Anderson & Parker ; Cookson , ; Parker )…”