Local Elites, Land Rents, Selection, and Incentives for Development: Evidence from Village Chiefs in Indonesia — Gedeon Lim

Speaker

Gedeon Lim (University of Hong Kong)

Abstract

I use a historical policy in Java, Indonesia, to identify the long-run effects of awarding higher land rents to elected village chiefs. In the early nineteenth century, a homogeneous region was split, with chiefs on one side of the border awarded bengkok rights: cultivation rights over village rice land, a stable revenue-generating asset. Using a fuzzy spatial RDD, I find this policy led to persistent long-run differences in economic land rents for chiefs in affected villages, which have better development outcomes today. Chiefs with bengkok rights raise more funds and construct more public goods such that the villages under their rule are richer, healthier, and more highly educated. Using original data from in-depth qualitative fieldwork, I reconstruct the complete political and economic history of 931 chiefs in 193 villages elected between 1979 and 2014 and show that bengkok's influence has persisted through its impact on historical political selection and educational goods provision and contemporary (political) incentives. Higher land rents attracted better quality chiefs in the past. These chiefs were so effective at building schools that entire villages today remain more educated. Higher land rents today continue to attract a higher quality candidate pool, but neither candidates nor chiefs are more selected than the average villager. Instead, the positive development outcomes today appear to be shaped by the alignment of chiefs' incentives away from supra-village elite interests. Overall, my findings provide evidence that paying local leaders from a stable source of bottom-up, local revenue can benefit long-run political and economic development.

Room

Conference Room (A-S25)