Essays on Political Economy and Historical Development

This dissertation consists of three studies on political economy and economic history. The first study provides quasi-experimental evidence of electoral rewards for politicians who deviate from meritocracy in the selection of public sector personnel. The second study explores the intergenerational consequences of introducing old-age pensions. The third study, in joint work with Davis Kedrosky and Chiara Motta, investigates the wage effects of spatial competition in a monopsonistic market for Indigenous labor. While each chapter of this dissertation answers a separate research question, all three studies are motivated by a shared interest in the political economy of historical development. Whether studying patronage politics in Progressive Era New York City (Chapter 1), the first old-age pension program of the U.S. federal government during the Second Industrial Revolution (Chapter 2), or competition between colonial companies in Canada's early modern fur trade (Chapter 3), this dissertation aims to shed light on the role of the state and quasi-state organizations in shaping the historical development of North America.In Chapter 1, I study patronage in personnel selection under the paradigmatic political machine in the U.S. history, Tammany Hall in New York City. Electoral motives are frequently blamed for patronage in public organizations. But quantitative evidence on the behavior of patronage employees and whether they deliver an electoral return remains scarce. Focusing on the New York Police Department (NYPD) during 1900-1916 allows me to overcome the empirical challenges of estimating the electoral return to patronage: I collect new archival data to identify patronage employees, connect them to individual-level electoral responses, and leverage a difference-in-differences design that compares patronage employees to the control group of applicants who did not receive patronage. Linking NYPD patrolmen to their civil service exam results reveals that 21% of patrolmen in the period entered into police service despite lacking the required test scores. Consistent with historical narratives, I show that these patronage employees were more likely to be connected to the leaders of Tammany Hall, the city’s incumbent Democratic Party organization. Estimating a difference-in-differences design around the start of employment for patronage recipients, I find that patronage delivered a 10.3% increase in electoral support within a 50 meter radius around the employee’s address (measured in the number of voters registering as Democrats). This electoral response – and complementary results on promotions tied to electoral support – suggest that patronage employees are incentivized to mobilize the votes of their neighbors. The electoral logic of patronage jobs in exchange for votes has important implications for performance: Patronage employees performed 22.7% worse than their meritocratically selected peers. \nIn Chapter 2, I study the intergenerational effects of the first federal old-age pension law in the United States. In theory, when the state takes over services like old-age support, this could replace informal care by children who previously provided these services in the parental home, thereby enabling the next generation to move to better economic opportunities. In the context of an industrializing and urbanizing economy this means that state-support, by relaxing location constraints, could contribute to economic modernisation. I test this hypothesis using the 1890 Dependent and Disability Pension Act as a natural experiment. The 1890 Act transformed the Union Army Civil War pension into a federal old-age support program for Union veterans. Using restricted-access full-count census data, I track the sons of Union veterans and match them to their census records in 1870, 1880, 1900, and 1910. I provide difference-in-differences estimates of the effects of pension eligibility, comparing sons of pension-eligible fathers to sons born to ineligible men of the same generation before vs. after the 1890 Act got passed. I find that the pension reform decreased cohabitation between sons and eligible fathers by 1.6%, increased the share of sons settling in urban areas by 8.4%, and shifted affected sons out of farming and into better paying occupations. In Chapter 3, together with Davis Kedrosky and Chiara Motta, we assemble novel data from the account books of the Hudson's Bay Company (HBC) to study the wage effects of a new entrant into a monopsonistic market for Indigenous labor. We show that in the setting of Canada's early modern fur trade, where Indigenous labor was free and mobile between firms, increased competition improved wages for Indigenous workers. This unique case study allows us to isolate market structure as the main channel of labor market power and to quantify the impact on wages. We find that a 100km decrease in distance to the nearest competitor location was associated with a 1.5% increase in wages.

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