Taxes, National Identity, and Nation Building: Evidence from France
Abstract: What is the relationship between state capacity and the creation of well functioning national institutions grounded in the rule of law? This paper argues that increased state capacity can lower the collective action costs of creating national institutions by facilitating the formation of a common identity. This hypothesis is tested by exploiting the fact that the French Monarchy was more successful in substituting its fiscal and legal institutions for those of the medieval seigneurial regime within an area of the country known as the Cinq Grosses Fermes (CGF). Highly disaggre- gated data on regional self-identification from the 1789 Cahiers de Doléances confirm that regions just inside the CGF were more likely than regions just outside the CGF to identify themselves as ‘French’ or ‘subjects of the king’ as opposed to identifying with local institutions. We also show that regions inside the CGF that affiliated with national identity were also more likely to provide local public goods, support the national political party, and had lower fertility rates in the nineteenth century.
