Political Institutions, Culture and Cooperation: Medieval “Social Contracts” and their Legacy

P. Buonanno M. Cervellati S. Lazzaroni G. Prarolo

UniFE seminar 16 April 2017

1/51 (Broad) Motivation

I Investigations of the role of political institutions for socio-economic outcomes mostly study contemporary states in the last decades

I Recent works study the role of historical experiences such as

I Free cities in medieval times for persistence in Civic Attitudes (Guiso al. JEEA2016) I The process of state formation and the persistent e↵ect of political institutions (from 1650) for cultural values and social capital (Tabellini JEEA2010)

I No systematic tracking and empirical investigations of the role of pre-industrial sovereign political entities

I This project explores the legacy of exposure to di↵erent political entities (and implicitly the social contracts they implemented) for current attitudes towards the state, measured by tax evasion

2/51 Empirical application using pre-industrial information...

...face many serious challenges. Two very relevant ones are:

1. Limited data availability

I Data available for modern countries for the last decades

I Pre-industrial data consistently available only for selected polities, cities and periods

2. Lack stable units of observation for the empirical analysis (until the emergence of modern states):

I Political entities emerged, evolved and disappeared (often times very rapidly); I Borders change frequently in pre-industrial times. With the few stable ones, RDD local analysis (Becker et al. EJ2016).

3/51 How has the literature dealt with these problems? (examples)

1. Imputing available historical data to today’s administrative units (e.g.: Tabellini JEEA2010 imputing information on constraints on the executive from 1600 to today’s administrative regions)

2. Restricting analysis to selected political entities (e.g. Dincecco and Katz EJ2014 on fiscal centralization and growth; Gennaioli and Voth REStud2015 on fiscal/ capacity and state consolidation)

3. Restricting analysis to subset of locations hosting historical cities (Bosker et al. REStat2013 on urbanization; Guiso et al. JEEA2016 on persistence of civic capital in 65 medieval free-cities)

4/51 Today’s focus on : Our contribution

1. Construct a non-selective yearly panel tracking the emergence, evolution and disappearance of all polities ruling in Italy () in the period 1000-1800

2. Use cells 10x10 Km as stable units of observation

3. Collapse the panel dataset to cross section to obtain statistics for today’s Italian municipalities

4. Investigate the role of history of political institutions on tax evasion today at the municipality level

5. Explore the legacy of di↵erent types of polities and di↵erential intensity of temporal and spatial ”treatments” across di↵erent locations within the ruling polities

5/51 A Brief on Historical context in Italy 1000-1800: Timeline

I Year 1000 AD: Feudal system

I Large political entities ruling over the (Holy Roman and the Byzantine , the Longobards Kingdom, Fatimid Caliphate). Poorly Defined Governance and limited ability to tax (see Dincecco); Limits to freedom of individual activity/access to property of land;

I Before 1500 AD, some territories gained independence from these ”Big” rulers establishing self-governed “”.

I Emergence of Modern National States, conventionally located in 1650 (Tilly, 1975) their military and territorial control puts an end to these Republican experiences.

6/51 Brief on Historical context in Italy 1000-1800

(a) 1000 (b) 1278

(c) 1650 (d) 1800 7/51 Background conceptual framework General idea: institutions-as-equilibria (Greif and Kingstone 2011)

I “[...] it is ultimately the behavior and the expected behavior of others rather than prescriptive rules of behavior that induce people to behave (or not to behave) in a particular way.”

I The aggregated expected behavior (beyond any one individual’s control) constitutes and creates a structure that influences each individual’s behavior and perpetuates as long as it is

I confirmed (not refuted/eroded) by observed outcomes I reinforced (its self-enforcement doesn’t decline overtime) I transmitted to newcomers (inter-temporally regenerated).

Di↵erent social contracts as equilibria

I Asucientlyintense and long exposure to the di↵erent social contracts (historical policies and organization of economic activities) a↵ected (and was sustained by) di↵erent attitudes towards the state.

I Both these ”social contracts”andindividual attitudes can persist and be subject to path dependence

8/51 Background conceptual framework: a step forward

Coevolution of culture and institutions (Bisin and Verdier 2017)

I “Era questo un ordine buono, quando i cittadini erano buoni [...] ma diventati i cittadini cattivi, divento’ tale ordine pessimo.” Niccolo’ Machiavelli, Discorsi, I. 16, 1531

I They characterize conditions on the socio-economic environment such that culture and institutions complement (substitute) each other, giving rise to a multiplier e↵ect which amplifies (dampens) their combined ability to spur economic activity

I Thanks to data on institutions’ behaviour, we can test one of their model’s prediction

I we find complementarity between individuals’ attitudes toward the state and institutions’ behaviour I in principle multiples steady states can arise, so our findings could come from this mechanism I issues of endogeneity, IV, etc. are therefore ill-posed )

9/51 Dataset: tracking the emergence and evolution of polities

First step of the procedure:

Record all polities and map the information at cell level:

I Exploit yearly maps 1000-1800 from the Centennia Historical Atlas of Europe (Reed 2014);

I Record all polities over the period 1000-1800: 55 sovereign polities;

I Map the information on identity of the sovereign polity ruling each location at cell level;

10 / 51 Visual Illustration: Example AD 1278

11 / 51 Dataset: identification of new sovereign political entities

Second step: A polity is coded as a Medieval if: 1. Using information on year/size of emergence (statistical approach):

I It appears in the dataset after the year 1000 AD I It is smaller than the political entity previously ruling the respective territories 2 I It is smaller than about 10K Km (100X100 Km, 100 cells) in the year of appearance (rule of thumb for being small)

2. For sovereign entities emerged before year 1000 use of further historical sources (historical approach):

I in map of 1000 (is a Maritime Republic) independent from the HRE I in map of 1000 but is part of the Byzantine I ...

12 / 51 Resulting Database

1. Tracks emergence, evolution of territorial control and disappearance of each polity ruling over the Italian peninsula over the period 1000-1800 (baseline unit of observation is 10 10km grid cells at yearly frequencies). ⇥ 2. Codes polities’ Republican nature [0-1] (along the lines of the idea of ”Republican and Autocratic Traditions” in the terminology of Putnam, 1993)

I 21 ”Republics”. Asti, Bologna, Brescia, Estense, , Lucca, Mantua, Massa, , Montferrat, Padua, Pelavicino, Perugia, San Marino, Siena, Urbino, Verona, della Scala, , , Venezia;

I 34 other ”Non Republics - Autocratic” Polities. Angevins, Aragonese, Bohemia, , Cisalpine Republic (), Dauphine, Ezzelino* (1252-1259), Fatimids, France, Great Britain, Habsburgs, Holy , Hungary, Kingdom of Burgundy, , Longobards, Lesser Imperial States, Lesser Italian States*, Lombard League*, Luxembourgs, Naples (1000), Norman Italy, , Papal State*, Parma* (1500), , (1798)), Savoy, (1000), Spain, Spanish Habsburgs, Stateless (Sardinya), Swiss League, Wittelsbachs; 3. We map (collapse) information on history of political institutions (and geo-location) for about 8100 municipalities (today)

13 / 51 Baseline Measures of Exposure to Rule by Republics:

I Ruled by Republics: Dummy indicating whether a territory was subject to the rule of a ”Republic” in the period 1000-1800

I Time Ruled by Republics: time ruled by a Republic over the period 1000-1800

Both measures obtained for di↵erent types of Republics and status within them (see later)

Linear hypothesis: 200 years under Florence + 200 years under Siena = 400 years (relaxed in last slide + robustness)

(Spatial intensity of treatment: distance to capital of ruling polity)

14 / 51 Dataset: Territory in Italian Peninsula Ruled by Republics by year (1000-1800)

15 / 51 Measure of Attitudes Towards the State

I Evasion of the television ownership tax: Share of households not paying the television tax in each municipality (about 8100 observations).

I Not sanctioned; I Flat payment of small amount (around 100 euros per year); I Payment is private information (cultural rather than social issue)

I Proxy for a deeply-rooted individual willingness to contribute to public! goods

16 / 51 Research Question

I Is today’s tax evasion related to the pre-industrial exposure/intensity to the Rule by the Republics?

I Does the exposure to di↵erent social contracts (i.e. di↵erent types of republics) matter?

17 / 51 Tax Evasion Today and Time Ruled by Republics 1000-1800

Legend Legend TV tax evasion Time ruled by (%) Republics (centuries)

0.0 - 9.9 0 10 - 21 0.01 - 1.24 22 - 26 1.25 - 1.84 27 - 30 1.85 - 2.12 31 - 34 2.13 - 2.71 35 - 38 2.72 - 3.17 39 - 44 3.18 - 3.75 45 - 50 3.76 - 4.59 51 - 58 4.60 - 4.96 59 - 71 4.97 - 5.31 72 - 93 5.32 - 10.22

18 / 51 Regression Analysis: Baseline Co-variates:

I Geography: Altitude, Ruggedness, Distance from sea (Km), Distance from rivers (Km), Caloric Suitability, City is on the coast, City 5 km from the coast

I Political Instability: Number of polities ruling over the territory of the municipality, 1000-1800

I Historical Population and Routes: Population in 1000 AD (thousands), Distance to closest bishop in 1000 AD (Km), Distance from Roman roads (Km)

19 / 51 Preliminary Results: Republics (Dummy) and Tax Evasion

Dep.Var. TaxEvasion-MunicipalityLevel (1) (2) (3) (4) (5) (6) Dummy Time Ruled by Republics -6.888*** -4.223*** -4.269*** -1.444*** -0.723* -0.694* (0.449) (0.968) (1.015) (0.344) (0.399) (0.401) Geography No Yes Yes No Yes Yes PoliticalInstability No Yes Yes No Yes Yes Historical Pop./Routes No No Yes No No Yes Observations 8,055 8,055 8,055 8,055 8,055 8,055 R-squared 0.097 0.210 0.212 0.065 0.198 0.201

Double-clustered standard errors along treatment dimensions (locations with same sequence of rulers and republican experience) *** p<0.01, ** p<0.05, * p<0.1

Determinants IV Heterogeneity

20 / 51 Di↵erent ”Republican” Social Contracts

The need to create and consolidate fiscal and military capacity implied that Communal Republics needed to make contribution to the public good more appealing:

I A system of Direct Taxes (on people ”focatico”, activities and properties);

I Provision of Local Public goods: protection-police, public hygiene, education;

Maritime Republics had higher military capacity (the fleet) and fiscal capacity (rents from ) and faced limited need to have ”incentive compatible” fiscal policies (tax and public goods).

Communal Republics implemented more economically and politically inclusive! social contracts while maritime republics implemented more extractive social contracts (particularly in the annexed territories...) based on indirect taxes (forcefully collected at e.g. dogana);

21 / 51 Historical Narratives: Di↵erent ”Republican” Social Contracts Communal Republics Maritime Republics I Low military capacity (Parker, I High military capacity (fleet) (Mallett 1996:12); and Hale, 1984) I Need to build a fiscal base (Carboni, I Limited need to build fiscal capacity: 2008); Trade rents (Carboni, 2008: 30)

I Consolidation of inland borders I Overseas and inland expansionary (Chittolini, 1979); (colonial) strategy: territorial control and rent extraction (Ventura, 1964); I Face high (fiscal) competition (rents from productive activities) (Belfanti, I Low fiscal Competition (extensive 2001) rents from sea-trade); I Professionalized Public I ”Familistic-oligarchic” public Administration (term limits) (Putnam administration (De Lara, Greif, Jha, 1993) 2008); I Decentralized Trade and Activities I Centralized control of trade (and (Hyde 1973) military power);

22 / 51 Putnam on the ”Republican” Social Contracts.

”Public Administration in the communal republics was professionalised. A corp of experts in municipal government developed remarkably advanced systems of public finance (including a market in negotiable public securities), land reclamation, commercial law, accounting, zoning, public hygiene, economic development, public education, policing, and government by committee (Putnam 1993:126)”

23 / 51 Bologna: (Free City in 1116), Communal Republic in 1211 ”Capital of Communal Italy, with an informal pre-eminence based not on force or wealth but on intellectual leadership”Hyde(1973)witha”professionally trained jurist-administrator elected for a limited term”, Waley (2009)

The ‘Liber Paradisus’

I 1256-7: Bologna proclaims abolition of slavery all the serfs (5,855) were I In the beginning the Lord planted released upon payment by the aparadiseofdelights,inwhichhe commune to lords at market put the man whom he had formed price (Bonaccorso da Soresina) [...] giving him the most perfect and perpetual freedom. I Former slaves had the I Freedom is a priceless treasure obligation to reside in the [...]. Within its jurisdiction territory of Bologna and (Bologna) eradicated to its roots pay taxes the stain of slavery. Since this is a noble and free city that can host only free men. 24 / 51 Regression Analysis: Further Co-variates:

Historical ”political” controls

I Free City: 65 municipalities, Guiso et al. JEEA2016

I :RuledbyNormans(repressive bureaucracy)

Contemporary controls

I Income and Population: Average Income, Population (thousands)

I Inequality: Land Ownership in 2001 (Gini), Income Inequality in 2001 (Gini)

25 / 51 ”Social Contracts”: Communal vs Maritime - Republics

Dep.Var. TaxEvasion-MunicipalityLevel Sample Full Within North Within Republics (1) (2) (3) (4) (5) (6) Time Ruled by: Communal Republics -1.068*** -0.927*** -1.114*** -1.093*** -0.590*** -0.581*** (0.193) (0.223) (0.244) (0.239) (0.224) (0.225) Maritime Republics -0.193 -0.041 0.298 0.320 0.585** 0.595** (0.482) (0.515) (0.366) (0.359) (0.246) (0.246) Free City -1.860** -1.024 -0.525 (0.904) (0.925) (1.045) Normans 1.861* 3.093*** 5.332* (1.061) (0.644) (3.055) PoliticalInstability Yes Yes Yes Yes Yes Yes Geography Yes Yes Yes Yes Yes Yes HistoricalPop.andRoutes Yes Yes Yes Yes Yes Yes Income and Population Yes Yes Yes Yes Yes Yes Inequality Yes Yes Yes Yes Yes Yes Observations 8,055 8,055 5,508 5,508 4,614 4,614 R-squared 0.227 0.230 0.296 0.297 0.270 0.271

26 / 51 Seeds of Independence and Annexed Territories

The spatial-temporal dimension of the original data allows to explore the role of the process of exposure to these political entities. Discriminate between territories exposed to the political rule of the Republics...

I since their emergence: The Seeds;

I subsequently annexed: The Annexed;

27 / 51 Seeds and Annexed territories: Visual Examples

Legend Capital of Republic Capital Venice Communal Republics Seeds Annexed Bologna Maritime Republics Seeds

Florence Annexed

28 / 51 Di↵erent social contracts & Annexed Territories

Communal and Maritime Republics adopted di↵erent strategies of Territorial Control:

I Communal Republics: Borders Consolidation and similar policies for Capital City, Annexed Cities and ”Contado”: Inclusive Social Contracts (Chittolini, 1979; Carboni, 2008);

I Maritime Republics: Colonialist Strategy, Di↵erential Treatment of Annexed Cities and ”Contado”: extractive social contracts (Ventura, 1964; Belfanti, 2001);

29 / 51 Seeds and Annexed: Communal vs Maritime Republics

30 / 51 DependentVariable TaxEvasion-MunicipalityLevel Sample Full Within North Within Republics (1) (2) (3) (4) (5) (6) Time Ruled as: Seeds Communal -1.209*** -1.105*** -1.207*** -1.203*** -0.733*** -0.728*** (0.228) (0.248) (0.257) (0.259) (0.227) (0.229) Annexed Communal -0.900*** -0.687*** -0.976*** -0.929*** -0.203 -0.188 (0.207) (0.249) (0.282) (0.270) (0.256) (0.258) Seeds Maritime -1.011** -0.882** -0.322 -0.287 -0.215 -0.209 (0.416) (0.367) (0.352) (0.344) (0.288) (0.286) Annexed Maritime -0.119 0.048 0.362 0.385 0.736*** 0.746*** (0.515) (0.548) (0.393) (0.386) (0.238) (0.238) Free City -2.072** -1.220 -0.951 (0.840) (0.869) (0.979) Normans 2.023* 3.216*** 5.488* (1.113) (0.633) (2.993) PoliticalInstability Yes Yes Yes Yes Yes Yes Geography Yes Yes Yes Yes Yes Yes Historical Pop./Routes Yes Yes Yes Yes Yes Yes Income and Population Yes Yes Yes Yes Yes Yes Inequality Yes Yes Yes Yes Yes Yes Observations 8,055 8,055 5,508 5,508 4,614 4,614 R-squared 0.229 0.232 0.298 0.299 0.277 0.277 31 / 51 Intensity of Exposure: Geographic Distance to Capital or Ruling Polity

The intensity of exposure to di↵erent social contracts can depend on:

I duration of the ”treatment” (time ruled by);

I intensity of the ”treatment” (geographic distance to the ruler);

For each annexed territory, we compute the average distance from each location to the capital of the ruling polity (labelled ”Mean distance to capital”)

32 / 51 Intensity of Exposure: Geographic Distance to Capital or Ruling Polity

DependentVariable TaxEvasion-MunicipalityLevel (1) (2) (3) (4) (5) (6) Sample AnnexedtoCommunalRep. AnnexedtoMaritimeRep. Mean Distance to Capital 0.011 0.006 -0.028*** -0.018** (0.009) (0.010) (0.011) (0.008) Time Ruled by Republics -0.652*** -0.581** 1.487*** 1.335*** (0.108) (0.116) (0.372) (0.365) Free City Yes Yes Yes Yes Yes Yes Normans Yes Yes Yes Yes Yes Yes PoliticalInstability Yes Yes Yes Yes Yes Yes Geography Yes Yes Yes Yes Yes Yes HistoricalPop.andRoutes Yes Yes Yes Yes Yes Yes Income and Population Yes Yes Yes Yes Yes Yes Inequality Yes Yes Yes Yes Yes Yes Observations 3,674 3,674 3,674 2,110 2,110 2,110 R-squared 0.277 0.280 0.281 0.254 0.281 0.288

33 / 51 Tax Evasion: Actions by Local Government

We look at the institutional side, in the spirit of Bisin and Verdier 2017, considering the outcome of the program ”Fight Against Tax Evasion” (for year 2012).

The program:

I Introduced incentives to involve the administration of municipalities in the detection of evasion of national taxes (personal income, VAT, firms income);

I Grants the receipts of successful detection to the municipalities;

We look at whether municipalities successfully cooperated with the central government in detecting evasion of national taxes at the extensive margin (dummy variable: Cooperate on Fight on Tax Evasion);

34 / 51 Fight Tax Evasion: Baseline Results

Dep. Var. Cooperate on Fight Tax Evasion - Municipality Level (1) (2) (3) (4) (5) (6) (7) (8) Dummy Time Ruled by Republics (All) 0.050*** 0.047*** 0.059*** 0.055*** 0.006*** 0.006*** 0.006*** 0.006*** (0.008) (0.008) (0.010) (0.010) (0.002) (0.002) (0.002) (0.002) Free City 0.306*** 0.304*** 0.262*** 0.261*** 0.314*** 0.312*** 0.274*** 0.272*** (0.076) (0.077) (0.068) (0.068) (0.079) (0.079) (0.070) (0.070) Normans 0.025*** 0.025*** -0.030** -0.028* 0.009 0.011 -0.050*** -0.046*** (0.008) (0.008) (0.015) (0.015) (0.007) (0.007) (0.016) (0.016) Tax evasion (%) -0.001*** -0.001*** -0.001*** -0.002*** (0.000) (0.000) (0.000) (0.000) Sample Full Full North North Full Full North North AllControls Yes Yes Yes Yes Yes Yes Yes Yes Observations 8,055 8,055 5,508 5,508 8,055 8,055 5,508 5,508 R-squared 0.088 0.089 0.096 0.098 0.086 0.088 0.094 0.097

Double-Clustered Standard Errors

35 / 51 Fight Tax Evasion: Di↵erent social contracts & Annexed Territories

Dep. Var. Cooperate on Fight Tax Evasion - Municipality Level Sample Full North (1) (2) (3) (4) Time Ruled as: Seeds Communal 0.012** 0.011** 0.013*** 0.012** (0.005) (0.005) (0.005) (0.005) Annexed Communal 0.032*** 0.031*** 0.033*** 0.032*** (0.006) (0.006) (0.006) (0.006) Seeds Maritime 0.009* 0.008* 0.004 0.003 (0.005) (0.005) (0.005) (0.005) Annexed Maritime 0.003 0.003 0.003 0.003 (0.003) (0.003) (0.003) (0.003) Free City 0.303*** 0.301*** 0.260*** 0.258*** (0.080) (0.080) (0.071) (0.071) Normans 0.014 0.016 -0.037** -0.033** (0.009) (0.010) (0.016) (0.016) Tax evasion (%) -0.001*** -0.001*** (0.000) (0.000) All Sets of Controls Yes Yes Yes Yes Observations 8,055 8,055 5,508 5,508 R-squared 0.095 0.096 0.104 0.106

Double-Clustered Standard Errors 36 / 51 Accounting for the functioning of Communes - PRELIMINARY

We look at how communes are ruled by collecting yearly information on the person ruling the polity, the podesta’. Working hypothesis: higher ’openness’ of podesta’ should ameliorate the functioning of polities by letting more skilled people, through a market for administrators, to sit in the apical seats

What we do:

I calculate for each polity the number of podesta’ who were born outside the capital city of the polity

I for each today’s municipality construct the lengths of Communal experience (1, 2 and 4 splits) under each polity and weight them with the share of ”external” podesta’

It seems that in any kind of Republic ”external” podesta’ lead to lower tax evasion today

37 / 51 Fight Tax Evasion: Adjusting for share of external Podesta’

E↵ect of being independent - full split (1) (2) (3) (4) (5) (6) (7) (8) (9) Sample Sample Sample Sample Sample Sample Sample Sample Sample VARIABLES Full Full Full North North North Republics Republics Republics

Adj. Republics -1.199*** -1.407*** -1.020*** (0.252) (0.230) (0.297) Adj. Communal -1.439*** -1.480*** -1.092*** (0.306) (0.272) (0.269) Adj. Maritime -37.432** -13.585 -13.895 (15.400) (11.442) (11.501) Adj. Seeds Communal -1.521*** -1.520*** -1.153*** (0.327) (0.287) (0.263) Adj. Annexed Communal -1.116*** -1.300*** -0.625 (0.375) (0.331) (0.391) Adj. Seeds Maritime -60.079*** -37.594*** -37.292*** (15.566) (10.005) (12.262) Adj. Annexed Maritime -28.163* -3.845 -3.159 (16.448) (12.895) (11.936)

Allsetsofcontrols Yes Yes Yes Yes Yes Yes Yes Yes Yes Observations 8,055 8,055 8,055 5,508 5,508 5,508 4,614 4,614 4,614 R-squared 0.224 0.230 0.233 0.277 0.294 0.297 0.248 0.267 0.275 Double-Clustered Standard Errors

38 / 51 Other results / Way forward

I Robust to accounting for spatial autocorrelations (Conley S.E.);

I Robust to controlling for other Social Capital measures (Guiso, Nannicini, etc.)

I E↵ect on Civic (Non Governmental) Activities

I Robust to FE at di↵erent levels (Pre-Roman polities / Roman regions / Polities in 1000 / Current Regions / Randomly drawn FE)

I (Extension to the study of 1946 Italian referendum)

I (Extension to the study of European cities)

39 / 51 Conclusions

1. New dataset on sovereign political entities in Europe 1000-1800

I Non-selective in time and space I Stable units of observation I Possibility to investigate new/old research questions

2. Application on Italy today

I Pre-industrial political history matters for tax evasion today I Heterogeneous e↵ects depending on the type of social contract

40 / 51 THANK YOU!

[email protected]

41 / 51 Determinants of Republics: Dummy and Time Ruled by

Dep. Variable Republic (Dummy - Seeds) Time Ruled by Republics (1) (2) (3) (4) (5) (6) Altitude -0.0003*** -0.0003*** -0.0003*** -0.0025*** -0.0026*** -0.0022*** (0.0000) (0.0000) (0.0000) (0.0001) (0.0001) (0.0001) Ruggedness -0.0003*** -0.0003*** -0.0003*** 0.0005*** -0.0002 -0.0001 (0.0000) (0.0000) (0.0000) (0.0001) (0.0001) (0.0001) Caloric Suitability 0.0001*** 0.0001*** 0.0001*** 0.0001** 0.0003*** 0.0001*** (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) Distance from sea (Km) 0.0027*** 0.0025*** 0.0023*** 0.0082*** 0.0049*** 0.0004 (0.0001) (0.0001) (0.0001) (0.0005) (0.0005) (0.0005) Distance from rivers (Km) -0.0005*** -0.0006*** -0.0004*** -0.0031*** -0.0034*** -0.0003 (0.0000) (0.0000) (0.0000) (0.0003) (0.0003) (0.0002) City is on the coast -0.0166 -0.0207* -0.0159 -0.4688*** -0.4924*** -0.3779*** (0.0122) (0.0123) (0.0122) (0.0867) (0.0866) (0.0705) City within 5 km from coast -0.0043 0.0002 0.0011 0.0253 0.1467 0.1682 (0.0168) (0.0169) (0.0169) (0.1298) (0.1294) (0.1097) Population in 1000 AD 0.0018 0.0016 0.0000 -0.0036 (0.0020) (0.0021) (0.0054) (0.0068) Distance to bishop in 1000 AD (Km) 0.0026*** 0.0023*** 0.0360*** 0.0286*** (0.0005) (0.0005) (0.0038) (0.0030) Distance from Roman roads (Km) 0.0001 -0.0004 0.0390*** 0.0276*** (0.0008) (0.0008) (0.0034) (0.0032) Free City 0.0240 0.5936** (0.0596) (0.2383) Normans -0.0810*** -1.9107*** (0.0064) (0.0391) Observations 8,055 8,055 8,055 8,055 8,055 8,055 R-squared 0.2476 0.2511 0.2555 0.2215 0.2841 0.3998

Back 42 / 51 Tentative IV strategy: the Romzug

‘’The emperor is crowned with three crowns: because, the first time with the crown of silver he is crowned king of Alle- mania [by the archibishop of Mainz in Aachen], a second with the Iron Crown he is crowned King of Italy in Monza which is in the county of Milan, and a third with the golden crown, he is crowned in Rome Emperor of the Romans by the Supreme Ponti↵” (Iacobus de Varagine, [1941])

Locations closer to Romzug should ) show today di↵erent attitudes to- Least cost path based on Via Regia/Via wards the state through their ability to Imperii and major Roman roads with 3 gain/retain independence vs. imperial stops: (1) Aachen (2) Monza (3) Rome. reconquest

43 / 51 Tentative IV strategy: the Romzug

OLS First IV OLS First IV (1) (2) (3) (4) (5) (6) Dependent Tax Dummy Tax Tax Time ruled by Tax Variable Evasion Republics Evasion Evasion Republics Evasion Dummy Republics -4.269*** -4.100* (0.664) (2.165) Time ruled by Republics -0.694** -1.368* (0.303) (0.741) Distance toRomzug (ln) -0.377*** -1.129*** (0.061) (0.197 ) Geography Yes Yes Yes Yes Yes Yes PoliticalInstability Yes Yes Yes Yes Yes Yes Historical Pop./Routes Yes Yes Yes Yes Yes Yes Observations 8,055 8,055 8,055 8,055 8,055 8,055 R-squared 0.212 0.609 0.212 0.201 0.425 0.191 F-test 38.61 32.73

Double clustered standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1 Back

44 / 51 Heterogeneity of social contracts

Back 45 / 51 Fixed E↵ects

DependentVariable TVTaxEvasion-MunicipalityLevel (1) (2) (3) (4) (5) (6) (7) (8) Sample Full North Fixed Pre-Roman Roman Polities Modern Pre-Roman Roman Polities Modern E↵ects civilizations regions in 1000 regions civilizations regions in 1000 regions Time Ruled by Rep.:

Seeds Communal -0.653** -0.661** -1.053*** -0.571* -0.695** -0.667** -1.213*** -0.534* (0.290) (0.282) (0.240) (0.325) (0.309) (0.276) (0.266) (0.312) Annexed Communal -0.537 -0.537 -0.738*** -0.801* -0.656* -0.530 -0.902*** -0.701* (0.395) (0.425) (0.238) (0.486) (0.382) (0.351) (0.261) (0.422) Seeds Maritime -0.336 -0.363 -0.854** -0.425* 0.175 0.068 -0.399 -0.054 (0.399) (0.338) (0.368) (0.219) (0.418) (0.324) (0.329) (0.246) Annexed Maritime 1.093*** 0.986*** 0.281 0.802*** 1.309*** 1.140*** 0.400 0.871*** (0.255) (0.228) (0.415) (0.265) (0.212) (0.195) (0.382) (0.252) Free City -2.257** -0.907 -1.212 -1.910* -1.490 -0.552 -1.281 -1.404 (1.071) (0.812) (0.768) (1.127) (1.060) (0.803) (0.903) (1.051) Normans 0.402 -1.978*** 8.117*** -5.935*** 1.581* -2.121 2.396*** -4.089*** (0.709) (0.399) (1.463) (0.254) (0.939) (1.295) (0.495) (1.293) Allcontrols Yes Yes Yes Yes Yes Yes Yes Yes Observations 8,055 8,055 8,054 8,055 5,508 5,508 5,507 5,508 R-squared 0.302 0.336 0.287 0.369 0.371 0.396 0.305 0.418

46 / 51 Random Fixed E↵ects

47 / 51 Presence of Organ Donation Association: Baseline Results

Dependent Variable Presence of Organ Donation Association (Dummy) - Municipality Level (1) (2) (3) (4) (5) (6) Dummy Time Ruled by Time Ruled by Republics (All) 0.004 -0.002 0.001 0.000 (0.007) (0.008) (0.002) (0.001) Seeds Communal -0.001 -0.002 (0.003) (0.003) Annexed Communal 0.014*** 0.013*** (0.005) (0.005) Seeds Maritime 0.007 0.007 (0.011) (0.012) Annexed Maritime -0.004*** -0.003** (0.001) (0.001) Free City 0.598*** 0.597*** 0.599*** 0.597*** 0.593*** 0.591*** (0.057) (0.057) (0.057) (0.058) (0.056) (0.056) Normans 0.007 0.010 0.006 0.011 0.014 0.020** (0.009) (0.009) (0.010) (0.010) (0.010) (0.010) Tax evasion (%) -0.002*** -0.002*** -0.002*** (0.000) (0.000) (0.000) All Sets of Controls Yes Yes Yes Yes Yes Yes Observations 5,508 5,508 5,508 5,508 5,508 5,508 R-squared 0.222 0.227 0.222 0.227 0.227 0.232 48 / 51 Geographic Distance to Rulers: Presence of Aido Association

DependentVariable PresenceofAidoAssociation(Dummy)-MunicipalityLevel (1) (2) (3) (4) (5) (6) (7) (8) Sample AnnexedtoCommunalRep. AnnexedtoMaritimeRep. Mean Distance to Capital -0.000* -0.000 -0.000 -0.000 -0.000** -0.000*** (0.000) (0.000) (0.000) (0.000) (0.000) 0.000) Time Ruled by Republics 0.015*** 0.014*** 0.013*** -0.010*** -0.011*** 0.010*** (0.005) (0.005) (0.005) (0.004) (0.004) (0.003) Political Instability -0.002*** -0.002*** -0.002*** -0.002*** 0.001* 0.000 0.000 0.001 (0.000) (0.000) (0.000) (0.000) (0.000) (0.001) (0.001) (0.001) Free City 0.603*** 0.594*** 0.594*** 0.594*** 0.335*** 0.324*** 0.322*** 0.321*** (0.073) (0.073) (0.073) (0.073) (0.081) (0.082) (0.081) (0.082) Normans -0.007 -0.039 -0.031 -0.008 (0.023) (0.024) (0.025) (0.024) Tax evasion (%) -0.002*** -0.001*** (0.000) (0.000) Allcontrols Yes Yes Yes Yes Yes Yes Yes Yes Observations 3,674 3,674 3,674 3,674 2,110 2,110 2,110 2,110 R-squared 0.240 0.245 0.245 0.248 0.347 0.351 0.353 0.355

49 / 51 Number of No-Profit Associations: Baseline Results

Dependent Variable Number of No-Profit Associations 1,000 inh.- Municipality Level (1) (2) (3) (4) (5) (6) Dummy Time Ruled by Time Ruled by Republics (All) -0.138 -0.019 -0.108 -0.104 (0.471) (0.498) (0.091) (0.101) Seeds Communal -0.042 0.009 (0.071) (0.068) Annexed Communal 0.079 0.118 (0.100) (0.103) Seeds Maritime -0.029 -0.017 (0.092) (0.082) Annexed Maritime -0.172 -0.189 (0.107) (0.121) Free City 1.986*** 2.012*** 1.990*** 2.044*** 1.902*** 1.953*** (0.319) (0.317) (0.321) (0.318) (0.320) (0.320) Normans -4.427*** -4.478*** -4.530*** -4.642*** -4.439*** -4.579*** (0.938) (0.918) (0.875) (0.881) (0.845) (0.862) Tax evasion (%) 0.038*** 0.037*** 0.042*** (0.013) (0.013) (0.014) All Sets of Controls Yes Yes Yes Yes Yes Yes Observations 5,427 5,427 5,427 5,427 5,427 5,427 R-squared 0.356 0.360 0.357 0.362 0.359 0.36550 / 51 Geographic Distance to Rulers: No Profit Associations Per Capita

DependentVariable NoProfitAssociationsPerCapita-MunicipalityLevel (1) (2) (3) (4) (5) (6) (7) (8) Sample AnnexedtoCommunalRep. AnnexedtoMaritimeRep. Mean Distance to Capital 0.001 0.003 0.003 0.002** 0.000 0.000 (0.002) (0.002) (0.002) (0.001) (0.001) (0.001) Time Ruled by Republics 0.161** 0.197** 0.224*** -0.286*** -0.282*** -0.274*** (0.070) (0.077) (0.080) (0.062) (0.063) (0.072) Free City 2.175*** 2.077*** 2.056*** 2.066*** 1.871*** 1.522*** 1.531*** 1.538*** (0.367) (0.371) (0.372) (0.359) (0.459) (0.472) (0.471) (0.470) Normans -3.087*** -3.585*** -3.616*** -3.395*** (0.285) (0.380) (0.350) (0.432) Tax evasion (%) 0.047*** -0.011 (0.013) (0.011) Allcontrols Yes Yes Yes Yes Yes Yes Yes Yes Observations 3,608 3,608 3,608 3,608 2,080 2,080 2,080 2,080 R-squared 0.283 0.285 0.286 0.294 0.252 0.266 0.266 0.266

51 / 51