The Indian Reorganization Act, Tribal Sovereignty, and Economic Development
Abstract: In 1934 the US government passed significant legislation governing American Indian reservations, the Indian Reorganization Act (IRA). Adoption of the IRA was voluntary and tribes declining the IRA faced less federal oversight. This paper measures the impact of IRA adoption on current reservation development. To mitigate selection concerns, I exploit IRA voting results from the mid-1930s by restricting my analysis to tribes that held close elections. Empirical results using 1990 reservation-level census data indicate that IRA adoption stifled economic development. Per capita income is over 40 percent lower among IRA reservations. Educational differences and a disparity in racial integration explain a large fraction of the income differential. Legislation in the late 1980s reduced federal oversight; as a result these income differences diminish marginally by 2010. The results are robust to demographic, geographic, and resource endowment controls. These results indicate increased self-governance is necessary for development on Indian reservations.
