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Property institutions and business investment on American Indian reservations

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  • Akee, Randall
  • Jorgensen, Miriam

Abstract

We test the hypothesis that property institutions are responsible for the persistent low levels of business and economic development on American Indian reservations. American Indian lands are held in trust by the US Federal government and may not be used as collateral. We exploit the uniform and equal distribution of land between the Agua Caliente tribe and non-Indians in Palm Springs, CA in our analysis. Due to the General Allotment Act of 1887, the land was divided in a checkerboard pattern with even-numbered parcels provided to Agua Caliente government or individual tribal members and odd-numbered parcels (held in fee-simple status) were sold to non-Indians. Because of this, we overcome the usual land quality selection problem between the two types of property institutions. We find that holding local amenities and other characteristics of the parcel constant, there is no difference in the level of business investment on trust and fee simple properties. These results indicate that the inability to use American Indian land as collateral does not drive the low levels of observed business investment; other mechanisms and institutions may be the culprit.

Suggested Citation

  • Akee, Randall & Jorgensen, Miriam, 2014. "Property institutions and business investment on American Indian reservations," Regional Science and Urban Economics, Elsevier, vol. 46(C), pages 116-125.
    • Handle: RePEc:eee:regeco:v:46:y:2014:i:c:p:116-125
    DOI: 10.1016/j.regsciurbeco.2014.04.001
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    References listed on IDEAS

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    1. Anderson, Terry L & Lueck, Dean, 1992. "Land Tenure and Agricultural Productivity on Indian Reservations," Journal of Law and Economics, University of Chicago Press, vol. 35(2), pages 427-454, October.
    2. Abhijit Banerjee & Lakshmi Iyer, 2005. "History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India," American Economic Review, American Economic Association, vol. 95(4), pages 1190-1213, September.
    3. Terry L. Anderson & Dominic P. Parker, 2008. "Sovereignty, Credible Commitments, and Economic Prosperity on American Indian Reservations," Journal of Law and Economics, University of Chicago Press, vol. 51(4), pages 641-666, November.
    4. Quy-Toan Do & Lakshmi Iyer, 2008. "Land Titling and Rural Transition in Vietnam," Economic Development and Cultural Change, University of Chicago Press, vol. 56(3), pages 531-579, April.
    5. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-937, October.
    6. Cornell, Stephen & Kalt, Joseph P., 2000. "Where's the glue? Institutional and cultural foundations of American Indian economic development," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 29(5), pages 443-470.
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    Cited by:

    1. Johnson, Michael Kotutwa & Lien, Aaron M. & Sherman, Natalya Robbins & López-Hoffman, Laura, 2018. "Barriers to PES programs in Indigenous communities: A lesson in land tenure insecurity from the Hopi Indian reservation," Ecosystem Services, Elsevier, vol. 32(PA), pages 62-69.
    2. Button, Patrick & Walker, Brigham, 2020. "Employment discrimination against Indigenous Peoples in the United States: Evidence from a field experiment," Labour Economics, Elsevier, vol. 65(C).
    3. Muyang Ge & Eric C. Edwards & Sherzod B. Akhundjanov, 2020. "Irrigation Investment on an American Indian Reservation," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(4), pages 1083-1104, August.
    4. Leonard, Bryan & Parker, Dominic P. & Anderson, Terry L., 2020. "Land quality, land rights, and indigenous poverty," Journal of Development Economics, Elsevier, vol. 143(C).
    5. Randall Akee & Elton Mykerezi & Richard Todd, 2020. "Business Dynamics on American Indian Reservations: Evidence from Longitudinal Datasets," Working Papers 20-38, Center for Economic Studies, U.S. Census Bureau.
    6. Valentina Dimitrova-Grajzl & Peter Grajzl & A. Joseph Guse & Richard M. Todd & Michael Williams, 2018. "Neighborhood Racial Characteristics, Credit History, and Bankcard Credit in Indian Country," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(3), pages 410-441, September.
    7. Laurel Wheeler, 2019. "Property Rights, Place-Based Policies, and Economic Development," Working Papers 19-16, Center for Economic Studies, U.S. Census Bureau.

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    More about this item

    Keywords

    Business investment; Land regulation; Property rights; Dawes Act;
    All these keywords.

    JEL classification:

    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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