Slavery, Reconstruction, and Fiscal Capacity in the American South

• In Event: Endogenous State Capacity

Abstract

What explains variation in fiscal capacity over time and across sub-national units within the same country? This paper argues that local political elites can respond to democratization by weakening fiscal capacity. Places where such a phenomenon is likely to occur are those characterized by high levels of social-status inequality arising from historical inter-group segregation. In such places, elites can build cross-class coalitions to weaken tax capacity in order to minimize redistribution to newly enfranchised groups. We examine the historical legacies of slavery and Reconstruction on fiscal capacity at the county-level in the American South. We find that the end of the Civil War was associated with an increase in taxation and better bureaucratic quality under an occupying North in counties where there were greater numbers of emancipated former slaves. However, after Reconstruction ended, the same counties were more likely to see a weakening of fiscal capacity as white “Redeemers” attempted to roll back institutional changes. Importantly, we show that counties where fiscal weakening occurred after Reconstruction are also those with weaker tax institutions in the present day. We draw on multiple data sources, including historical U.S. Census data and contemporary tax collection data to develop measures of fiscal capacity and social- status inequality.

Authors

• Pavithra Suryanarayan, Johns Hopkins University

• Steven White, Syracuse University