The Effect of Party Geographic Scope on Government Outcomes: Evidence from Peruvian Municipalities

Fernando Aragon (Simon Fraser University)
Alexey Makarin (Northwestern University)
Ricardo Pique (Ryerson University)

Abstract : Does the geographic scope of the ruling local party affect local government outcomes? This is an important question given that, in many developing countries, sub-national parties have emerged as dominant forces in local elections. Using a regression discontinuity design and rich data from Peruvian municipalities, we find that party geographic scope has no effect on policy outcomes, both locally and in neighboring jurisdictions. We explore several explanations for these results and show that party types differ in politician selection, but are no different in terms of accountability and face similar electoral incentives. Overall, our results challenge the view that sub-national parties are detrimental to local governance.

How Transaction Costs Obstruct Collective Action: Evidence from California’s Groundwater

Andrew B. Ayres (UC Santa Barbara)
Eric C. Edwards (Utah State University)
Gary D. Libecap (UC Santa Barbara)

Abstract : Collective action to remedy the losses of open access to common-pool resources often is late and incomplete, extending rent dissipation. Examples include persistent over-exploitation of oil fields and ocean fisheries, despite general agreement that production constraints are needed. Transaction costs encountered in assigning property rights are an explanation, but analysis of their role is limited by a lack of systematic data. We examine governance institutions in California’s 445 groundwater basins using a new dataset to identify factors that influence the adoption of extraction controls. In 309 basins, institutions allow unconstrained pumping, while an additional 105 basins have weak management plans. Twenty of these basins are severely overdrafted. Meanwhile, users in 31 basins have defined groundwater property rights, the most complete solution. We document the critical role of transaction costs in explaining this variation in responses. This research adds to the literatures on open access, transaction costs, bargaining, and property rights.

Elite Conflict, Demographic Collapse, and the Transition to Direct Rule: Evidence from Colonial Mexico

Francisco Garfias (UC San Diego)
Emily A. Sellars (Texas A&M University)

Abstract : When do central governments centralize control over their regions? We develop a theory of the transition from indirect to direct rule, focusing on the contentious relationship between a ruler and local potentates, who provide civil order at the expense of a share of local revenue. A rapid fall in the local population reduces the threat of rebellion, as well as the willingness and ability of potentates to resist the ruler’s efforts to centralize power. A demographic collapse thus enables the ruler to replace the potentates with direct agents of the state and invest in a fiscal bureaucracy, with important implications for the development of state capacity. We evaluate the theory using subnational panel data from 16th- and 17th-century Mexico around the time of one of the most dramatic demographic collapses in history. To identify the effect of the collapse on the centralization of fiscal authority, we employ a difference-in-differences empirical strategy and an instrumental-variables approach based on the climatic conditions associated with a series of epidemics that decimated the population during this period. Our results show that the centralization of power occurred faster in areas that experienced a more dramatic loss in population.

Persistent Effects of Colonial Institutions on Human Capital Formation and Long-run Development: Local Evidence from Regression Discontinuity Design in Argentina

Rok Spruk (University of Ljubljana - Laibach)
Mitja Kovac (University of Ljubljana - Laibach)

Abstract : We exploit the geographic discontinuity in the integration into the Spanish colonial empire as a source of variation in human capital formation and long-run development across 527 departments in Argentina. A unique legal institution – the Audiencia Real – that ended more than 2 centuries ago might be very important in explaining Argentinian regional development down to the present day. To this end, we measure the department-level distance from the seat of colonial audiencia in Upper Peru that used to be source of law and colonial institutions for the areas of Rio de la Plata until its split from the Viceroyalty of Peru in 1776. Our identification strategy exploits georeferenced spatial boundary splits with local quasi-randomization between the former areas integrated in the Audiencia jurisdiction and the control areas as a source of variation in development levels. Our results show that the effect of pre-1776 colonial law and institutions imposed from the Colonial Audiencia in Upper Peru on the set of human capital and development outcomes is both strong and remarkably persistent. The evidence suggests departments outside the former Audiencia jurisdiction have lower rates of illiteracy, more computer-literate population, better physical and digital infrastructure and more widespread ownership of computers and cell phones. The established effects do not seem to be driven by outliers, and remain robust to the battery of specification checks, placebo tests and pass a number of falsification checks.