Random river: Trade and rent extraction in imperial China Marlon Seror * December 2020 Abstract This paper exploits changes in the course of the Yellow River in China to isolate exogenous variation in the natural distribution of economic centers across space and over 2,000 years. Using original data on population and taxation from dynastic histories and local gazetteers, I assess the effect of market access on population density and resource extraction. I find that the changes in connectedness have two opposite effects. First, they induce a very large increase in the level and concentration of economic activity in the short run. Second, they trigger a large increase in taxation per capita and an elite flight, which reverse the concentration effect in the longer run. *Universit´edu Qu´ebec `aMontr´eal,IRD{DIAL,
[email protected]. I thank James Fenske, Pei Gao, Stephan Heblich, Cl´ement Imbert, Ruixue Jia, Christian Lamouroux, Yu-Hsiang Lei, David Serfass, Lingwei Wu, Yu Zheng, Yanos Zylberberg, and seminar participants in Bristol and at the 2019 India-China Conference in Warwick for helpful comments and suggestions. The usual disclaimer applies. 1 Introduction As the economy grows, economic activity becomes increasingly concentrated in few cities. This process can be thought of as a consequence of economies of scale and ag- glomeration economies, and thus as conducive to economic development (Kim, 1995; Henderson et al., 2001). However, our understanding of agglomeration economies may be limited by the literature's focus on short-term economic effects, keeping po- litical structures constant. This paper uses data covering 2,000 years to study the very long run, as political structures react.