Edoardo Teso (Alesina Seminar)

See the seminar's full schedule here: Alberto Alesina Seminar on Political Economy

Today's Speaker

Edoardo Teso (Northwestern) "State Capacity as an Organizational Problem. Evidence from the Growth of the U.S. State Over 100 Years” (joint with Nicola Mastrorocco)

Abstract

We study how the organization of the state evolves over the process of development, using a new dataset on the internal organization of the U.S. federal bureaucracy over 1817-1905. We first establish three sets of descriptive facts on the growth and organization of the U.S. state. First, there was a slow growth in state capacity until the 1850s, with a rapid growth thereafter, driven mainly by the state reaching more locations. Second, economic growth is positively associated with state presence, but distance from the headquarter (DC) limits state presence. Third, the state organization changes after the 1850s, with a lower reliance on employee turnover, a less tight link between the career of workers and that of their supervisors, and greater delegation of power outside DC. We hypothesize that technological innovations that reduce communication and transportation costs, and thus increase the government’s monitoring capacity, are an important driver of these facts. To test this hypothesis, we exploit the staggered expansion of the railroad and telegraph networks across time and space, which decreased monitoring costs between DC and different locations. We show that locations that become better connected to DC experience an increase in state presence, an increase in delegation of power, a decrease in employee turnover, and a decrease in reliance on trust as a way to staff the bureaucracy. The results suggest that high monitoring costs go hand in hand with a small, personalistic state organization based on networks of trust, while technological shocks lowering these costs are conducive to the emergence of modern bureaucratic states.

Co-sponsored by FAS and IQSS, the Alberto Alesina Seminar on Political Economy supports research-related activities that integrate the study of economics and politics, whether by studying economic behavior in the political process or political behavior in the marketplace. In general, positive political economy is concerned with showing how observed differences among institutions affect political and economic outcomes in various social, economic, and political systems and how the institutions themselves change and develop in response to individual and collective beliefs, preferences, and strategies.

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All interested faculty and students are invited to attend.