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

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Political Institutions, Culture and Cooperation: Medieval “Social Contracts” and Their Legacy 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/military 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 Italy: Our contribution 1. Construct a non-selective yearly panel tracking the emergence, evolution and disappearance of all polities ruling in Italy (Europe) 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 Italian peninsula (Holy Roman and the Byzantine Empires, 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 “Republics”. 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 Asufficientlyintense 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 Republic 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 Venice in map of 1000 (is a Maritime Republic) independent from the HRE I Naples in map of 1000 but is part of the Byzantine Empire 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, Florence, Lucca, Mantua, Massa, Milan, Montferrat, Padua, Pelavicino, Perugia, San Marino, Siena, Urbino, Verona, della Scala, Pisa, Genoa, Venezia; I 34 other ”Non Republics - Autocratic” Polities. Angevins, Aragonese, Bohemia, Byzantine Empire, Cisalpine Republic (Napoleon), Dauphine, Ezzelino* (1252-1259), Fatimids, France, Great Britain, Habsburgs, Holy Roman Empire, Hungary, Kingdom of Burgundy, Kingdom of Naples, Longobards, Lesser Imperial States, Lesser Italian States*, Lombard League*, Luxembourgs, Naples (1000), Norman Italy, Ottoman Empire, Papal State*, Parma* (1500), Provence, Roman Republic (1798)), Savoy, Sicily (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:
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