Date of Award

Spring 1-1-2015

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Murat Iyigun

Second Advisor

Jonathan E. Hughes

Third Advisor

Lee Alston

Fourth Advisor

Carol Shiue

Fifth Advisor

J. Anthony Cookson

Abstract

This dissertation focuses on long-run patterns of regional inequality by addressing two general themes: the importance of transportation networks for location choices of individuals and forms, and the role of institutions on economic development across Native American reservations. My findings highlight the significance of transportation networks, and local governance for regional economic development.

In the first chapter, I measure the effect of improvements in transportation infrastructure on industry growth and concentration. To address the endogenous placement of interstate highways, I instrument for eventual highway location using two proposed government plans. To address the endogeneity surrounding the timing of highway construction, I use a network theory algorithm to predict the timing of highway construction. The results indicate that the expansion of the Interstate Highway System (IHS) led to substantial employment growth in highway counties relative to non- highway counties. This employment growth was concentrated in a few industries. This paper demonstrates the importance of expanding transportation networks for the spatial arrangement of economic activity. In my second chapter, I concentrate on the U.S. agricultural sector. The IHS altered the structure of transportation costs. This paper provides the first empirical analysis of the impact of new interstate highway infrastructure on farm property values and the portfolio of agricultural commodities produced. Estimates correcting for endogenous highway locations and construction timing indicate the value of land per acre fell in highway locations relative to non-highway locations. This loss appears driven by a declining value of agricultural products sold. Additional results find no evidence that highway counties are more specialized in their production than non-highway counties.

In the final chapter, I exploit the decentralization of governance across American Indian reservations and measure the long-run development differences for reservations that were granted less sovereignty through the Indian Reorganization Act (IRA). To mitigate selection concerns regarding IRA adoption, I exploit IRA voting results by restricting my analysis to narrowly determined elections. Results indicate that IRA adoption stifled economic development. Per capita income is over 40 percent lower on IRA reservations. Additional legislation in the late 1980s further decentralized IRA reservations; as a result income differences diminish by 2010.

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