Native American Economic History U.S. Economic History

Econ 4524

Dustin Frye

Connecting Native American Economic Development & History

¤  According to the 2000 Census, ¤  For those 25 and older, 33.1% have less than a high school

education, compared to 19.6% nation wide ¤  The poverty rate is 25.7%, compared to 12.4% nation wide ¤  Median earnings of Native Americans are 22% lower than the

national average. ¤  Native American life expectancy is 5 years less than the national

average. ¤  Deaths rates are significantly higher in several areas:

¤  Alcoholism – 514% ¤  Diabetes – 177%

¤  Before we can understand how to fully address these issues, it’s important to understand why and how these areas developed like they did.

Features of Native American Reservations

¤  Tribal Organization & Sovereignty ¤  Legal Differences

¤  Casinos

¤  Different Institutions

¤  Agriculture and Resource Dependence ¤  Typically rural areas

¤  Water rights

¤  Mining, Fishing

¤  Agriculture

Land Allotment Timing During the Dawes Act

General Allotment Act of 1887

¤  Divided reservation land into parcels and assigned each tribal member a lot ¤  Initially a 25 year trust before receiving title

¤  Excess land made available for public purchase ¤  Proceeds placed in a government trust

¤  Executive branch designated reservations open for allotment

¤  Indian Reorganization Act of 1934 ends the Allotment Era ¤  Trust land frozen

Dawes Timing

¤  Allotment timing was instrumental in forming the property rights structure on reservations today ¤  Early allotment dates led to more land leaving trust status

¤  Later allotment dates resulted in more remaining in trust status

¤  Results in a mosaic of land tenures on reservations ¤  Fee-Simple, Individual Trust, Tribal Trust & Federal Trust

Dawes Today

¤  This land tenure structure is still found on reservations today

¤  Anderson & Lueck (1992) ¤  Land tenure types have different agricultural productivities

¤  Individual Trust is 30-40% less productive than Fee-Simple

¤  Tribal Trust is 85-90% less productive than Fee-Simple

Data and Empirics

¤  County Level Census Data 1880, 1890, 1900 & 1910

¤  Allotment and Baseline Reservation Information from the Bureau of Indian Affairs

¤  Hazard Model with local farming, demographic and reservation characteristics and regional farming and demographic characteristics

¤ Which characteristics are associated with motivating allotment timing?

Reservation Locations

Hazard Models

¤  I estimate Hazard Models to exploit variation in the timing of allotment ¤  Analysis of the length of time until “failure”

¤  The hazard rate at a particular time is the rate at which a duration of a particular event ends, conditional on having lasted until that time.

¤  The parameters indicate whether or not the characteristics of interest affected the “risk” or timing of allotment.

Survival Functions 0

.25

.5.7

51

0 10 20 30 40 50analysis time

95% CI Survivor function

Kaplan-Meier survival estimate

Survival Functions 0.

000.

250.

500.

751.

00

0 10 20 30 40 50analysis time

areaoffice = Aberdeen areaoffice = Andarko & Muskogeeareaoffice = Billings areaoffice = Minneapolisareaoffice = Sacramento areaoffice = Gallupareaoffice = Portland areaoffice = Phoenixareaoffice = Misc. Eastern

Kaplan-Meier survival estimates

(1) (2) (3) (4)

Population0Density 0.216*** 90.797*** 90.861***

(0.0683) (0.165) (0.198)

Share0of0Whites 92.373** 92.049*** 93.130***

(0.972) (0.668) (0.729)

Share0of0Improved0Acreage 90.490** 0.214

(0.206) (0.346)

Acres0of0Farmland0per0Sq0Mi 0.987*** 1.425***

(0.173) (0.293)

Original0Reservation0Size 0.228*** 0.339*** 0.399***

(0.0623) (0.0768) (0.0855)

Farm0Value0per0Acre 1.733*** 1.423***

(0.301) (0.547)

Year0Reservation0Established 90.00603*** 90.0111*** 90.0114***

(0.000421) (0.00106) (0.00114)

Population0Density 0.893*** 90.0272

(0.141) (0.309)

Share0of0Whites 3.265* 9.689**

(1.962) (4.104)

Share0of0Improved0Acreage 2.325*** 91.190***

(0.319) (0.456)

Acres0of0Farmland0per0Sq0Mi 90.850*** 90.568

(0.109) (0.348)

Farm0Value0per0Acre 91.490*** 0.466

(0.170) (0.573)

Observations 450 450 491 450

Demographic,and,Agricultural,Factors,that,Influence,Allotment,TimingExponential

Reservation0County

Neighboring0County

Preliminary Results

Positive and Negative coefficients indicate whether it increases or decreases the hazard of allotment or the “likelihood” of allotment

(1) (2) (3) (4)

Population0Density 0.216*** 90.797*** 90.861***

(0.0683) (0.165) (0.198)

Share0of0Whites 92.373** 92.049*** 93.130***

(0.972) (0.668) (0.729)

Share0of0Improved0Acreage 90.490** 0.214

(0.206) (0.346)

Acres0of0Farmland0per0Sq0Mi 0.987*** 1.425***

(0.173) (0.293)

Original0Reservation0Size 0.228*** 0.339*** 0.399***

(0.0623) (0.0768) (0.0855)

Farm0Value0per0Acre 1.733*** 1.423***

(0.301) (0.547)

Year0Reservation0Established 90.00603*** 90.0111*** 90.0114***

(0.000421) (0.00106) (0.00114)

Population0Density 0.893*** 90.0272

(0.141) (0.309)

Share0of0Whites 3.265* 9.689**

(1.962) (4.104)

Share0of0Improved0Acreage 2.325*** 91.190***

(0.319) (0.456)

Acres0of0Farmland0per0Sq0Mi 90.850*** 90.568

(0.109) (0.348)

Farm0Value0per0Acre 91.490*** 0.466

(0.170) (0.573)

Observations 450 450 491 450

Demographic,and,Agricultural,Factors,that,Influence,Allotment,TimingExponential

Reservation0County

Neighboring0County

Preliminary Results

Positive and Negative coefficients indicate whether it increases or decreases the hazard of allotment or the “likelihood” of allotment

Result Summary

¤  Agricultural variables, like farm value per acre and the share of farm land in a county seem to favor earlier allotment timing.

¤  Some of the demographic variables suggest that political organization was important.

¤  Initial reservation characteristics suggests larger reservations and younger reservations led to earlier allotment dates.

Leasing, Law and Land Tenure: Understanding the Impact of the Long-

Term Leasing Act of 1955

Review of Native American Land Tenure

¤  Reservation land is divided into four-types ¤  Fee-Simple

¤  Individual Trust

¤  Tribal Trust

¤  Federal Trust

Paper Overview

¤  Use a new reservation level panel dataset ¤  Examine national and regional trends in land tenure

¤  Explore how the Indian Long-Term Leasing Act (LTLA) of 1955 changed the flow of land between tenure types ¤  Significant changes to the growth rates of individual trust

land and fee-simple land

¤  Test for differential impacts of the LTLA by allotment dates ¤  Suggests that heirship may be a major mechanism through

which the LTLA is impacting land holding behavior

Reservation Map

0.1

.2.3

.4.5

1940 1950 1960 1970 1980Year

Share of Indiv. Trust Share of Tribal TrustShare of Federal Trust Share of Fee-Simple

Verticle line represents the passage of the Long-Term Leasing Act in 1955.Sources: See Data Appendix

Shares of Native American Land Tenures1939 to 1978

Heirship

¤  With each subsequent generation the fraction of ownership for any single individual falls exponentially.

¤  Particularly problematic for individual trust land ¤  Organization costs

¤  Leasing individual trust land has higher future costs

¤  As a result, marginal owners choose to sell now

Indian Long-Term Leasing Act of 1955

¤  All new leases and renewals on individual or tribal trust land require BIA approval ¤  Before LTLA – Administrative costs, Heirship Issues

¤  Expanded maximum lease length for individual and tribal trust from 5 years to 25 years

¤  Now organizational costs related to heirship are distributed over a longer time horizon

¤  In the short-run, the discounted present value of leasing individual trust land increases

¤  Expect slower flow of land from individual trust to fee-simple

Empirical Specification Seemingly Unrelated Regression

¤  TenurePctChange ¤  Avg. Percentage change from period t-i to t for a given tenure type

¤  LTLA=1 if year>1957

¤  Predictions: ¤  Tribal Trust land becomes more desirable after LTLA: β3 >0

¤  Reduction in flow of land to fee-simple: β3 <0

¤  Interested in the marginal effect of LTLA ¤  β2 +(β3 x Year)

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23

Mar

gina

l Effe

cts

-20 -10 0 10 20Years After LTLA

Marginal Effect Upper BoundLower Bound

Marginal Effects of LTLA on Individual Trust Pct Change

-4-2

02

4M

argi

nal E

ffect

s

-20 -10 0 10 20Years After LTLA

Marginal Effect Upper BoundLower Bound

Marginal Effects of LTLA on Fee Simple Pct Change

Incorporating Heirship

¤  Allotment Date Groups ¤  Unallotted vs. Early Allotment vs. Late Allotment

¤  Hypothesis: Land with more heirs, experiences more benefit following the LTLA ¤  Early allotment dates proxies for more heirs

-10

12

3M

argi

nal E

ffect

s

-20 -10 0 10 20Years After LTLA

Unallotted Allotted Before 1910Allotted After 1910

Marginal Effects of LTLA on Pct Changein Individual Trust by Allotment Date

-4-2

02

4M

argi

nal E

ffect

s

-20 -10 0 10 20Years After LTLA

Unallotted Allotted Before 1910Allotted After 1910

Marginal Effects of LTLA on Pct Changein Fee-Simple by Allotment Date

Paper Review

¤  Use a new reservation level panel dataset ¤  Examine national and regional trends in land tenure

¤  Explore how the Indian Long-Term Leasing Act (LTLA) of 1955 changed the flow of land between tenure types ¤  Significant changes to the growth rates of individual trust

land and fee-simple land

¤  Test for differential impacts of the LTLA by allotment dates ¤  Suggests that heirship may be a major mechanism through

which the LTLA is impacting land holding behavior

¤  Suggests policies aimed at decreasing transaction costs associated with Native American land tenure offer an alternative means of promoting economic development without sacrificing tribal sovereignty.