“Forced Coexistence and Economic Development: Evidence from Native American Reservations,” C. Dippel (2014)

I promised one more paper from Christian Dippel, and it is another quite interesting one. There is lots of evidence, folk and otherwise, that combining different ethnic or linguistic groups artificially, as in much of the ex-colonial world, leads to bad economic and governance outcomes. But that’s weird, right? After all, ethnic boundaries are themselves artificial, and there are tons of examples – Italy and France being the most famous – of linguistic diversity quickly fading away once a state is developed. Economic theory (e.g., a couple recent papers by Joyee Deb) suggests an alternative explanation: groups that have traditionally not worked with each other need time to coordinate on all of the Pareto-improving norms you want in a society. That is, it’s not some kind of intractable ethnic hate, but merely a lack of trust that is the problem.

Dippel uses the history of American Indian reservations to examine the issue. It turns out that reservations occasionally included different subtribal bands even though they almost always were made up of members of a single tribe with a shared language and ethnic identity. For example, “the notion of tribe in Apachean cultures is very weakly developed. Essentially it was only a recognition
that one owed a modicum of hospitality to those of the same speech, dress, and customs.” Ethnographers have conveniently constructed measures of how integrated governance was in each tribe prior to the era of reservations; some tribes had very centralized governance, whereas others were like the Apache. In a straight OLS regression with the natural covariates, incomes are substantially lower on reservations made up of multiple bands that had no pre-reservation history of centralized governance.

Why? First, let’s deal with identification (more on what that means in a second). You might naturally think that, hey, tribes with centralized governance in the 1800s were probably quite socioeconomically advanced already: think Cherokee. So are we just picking up that high SES in the 1800s leads to high incomes today? Well, in regions with lots of mining potential, bands tended to be grouped onto one reservation more frequently, which suggests that resource prevalence on ancestral homelands outside of the modern reservation boundaries can instrument for the propensity for bands to be placed together. Instrumented estimates of the effect of “forced coexistence” is just as strong as the OLS estimate. Further, including tribe fixed effects for cases where single tribes have a number of reservations, a surprisingly common outcome, also generates similar estimates of the effect of forced coexistence.

I am very impressed with how clear Dippel is about what exactly is being identified with each of these techniques. A lot of modern applied econometrics is about “identification”, and generally only identifies a local average treatment effect, or LATE. But we need to be clear about LATE – much more important than “what is your identification strategy” is an answer to “what are you identifying anyway?” Since LATE identifies causal effects that are local conditional on covariates, and the proper interpretation of that term tends to be really non-obvious to the reader, it should go without saying that authors using IVs and similar techniques ought be very precise in what exactly they are claiming to identify. Lots of quasi-random variation generates that variation along a local margin that is of little economic importance!

Even better than the estimates is an investigation of the mechanism. If you look by decade, you only really see the effect of forced coexistence begin in the 1990s. But why? After all, the “forced coexistence” is longstanding, right? Think of Nunn’s famous long-run effect of slavery paper, though: the negative effects of slavery are mediated during the colonial era, but are very important once local government has real power and historically-based factionalism has some way to bind on outcomes. It turns out that until the 1980s, Indian reservations had very little local power and were largely run as government offices. Legal changes mean that local power over the economy, including the courts in commercial disputes, is now quite strong, and anecdotal evidence suggests lots of factionalism which is often based on longstanding intertribal divisions. Dippel also shows that newspaper mentions of conflict and corruption at the reservation level are correlated with forced coexistence.

How should we interpret these results? Since moving to Canada, I’ve quickly learned that Canadians generally do not subscribe to the melting pot theory; largely because of the “forced coexistence” of francophone and anglophone populations – including two completely separate legal traditions! – more recent immigrants are given great latitude to maintain their pre-immigration culture. This heterogeneous culture means that there are a lot of actively implemented norms and policies to help reduce cultural division on issues that matter to the success of the country. You might think of the problems on reservations and in Nunn’s post-slavery states as a problem of too little effort to deal with factionalism rather than the existence of the factionalism itself.

Final working paper, forthcoming in Econometrica. No RePEc IDEAS version. Related to post-colonial divisions, I also very much enjoyed Mobilizing the Masses for Genocide by Thorsten Rogall, a job market candidate from IIES. When civilians slaughter other civilians, is it merely a “reflection of ancient ethnic hatred” or is it actively guided by authority? In Rwanda, Rogall finds that almost all of the killing is caused directly or indirectly by the 50,000-strong centralized armed groups who fanned out across villages. In villages that were easier to reach (because the roads were not terribly washed out that year), more armed militiamen were able to arrive, and the more of them that arrived, the more deaths resulted. This in-person provoking appears much more important than the radio propaganda which Yanigazawa-Drott discusses in his recent QJE; one implication is that post-WW2 restrictions on free speech in Europe related to Nazism may be completely misdiagnosing the problem. Three things I especially liked about Rogall’s paper: the choice of identification strategy is guided by a precise policy question which can be answered along the local margin identified (could a foreign force stopping these centralized actors a la Romeo Dallaire have prevented the genocide?), a theoretical model allows much more in-depth interpretation of certain coefficients (for instance, he can show that most villages do not appear to have been made up of active resistors), and he discusses external cases like the Lithuanian killings of Jews during World War II, where a similar mechanism appears to be at play. I’ll have many more posts on cool job market papers coming shortly!


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