Secure property rights are often deemed to be necessary for long-term development. Yet what happens when historical states institutionalize communal property rights based on family clans? I address this question by examining the long-term effects of communal property rights that were part of the Habsburg frontier system from 1551 until 1881. Using a regression discontinuity design and focusing on a part of the border that is today part of Croatia, I first show that the Habsburg Empire adopted communal property rights in the form of zadrugas, as a means to ensure the subsistence of borderland dwellers and maintain their allegiance. Despite the dissolution of the military colony in 1881, communal property rights persisted. In the long run, municipalities in the former military colony have lower household consumption, schooling, and public goods provision. The effect of communal property rights is exacerbated by low institutional and interpersonal trust.
PE Research Seminar: Bogdan Popescu
Thu, Feb 21, 2019, 12:15 pm