Forced Coexistence and Economic Development: Evidence From Native American Reservations

Studying Native American reservations, and their historical formation, I find that their forced integration of autonomous polities into a system of shared governance had large negative long‐run consequences, even though the affected people were ethnically and linguistically homogenous. Reservations that combined multiple sub‐tribal bands when they were formed are 30% poorer today, even when conditioning on pre‐reservation political traditions. The results hold with tribe fixed effects, identifying only off within‐tribe variation across reservations. I also provide estimates from an instrumental variable strategy based on historical mining rushes that led to exogenously more centralized reservations. Data on the timing of economic divergence and on contemporary political conflict suggest that the primary mechanism runs from persistent social divisions through the quality of local governance to the local economic environment.