Landel, H. N. (2022). The Mexican Hacienda System and Income Inequality: A Lasting Legacy of Colonialism?. Retrieved from https://doi.org/10.14418/wes01.1.2506
How do political institutions contribute to inequality? This thesis examines the long-run impacts of the hacienda system – a land-grant and forced labor system implemented by the Spanish – on income inequality in Mexico today. I propose two mechanisms through which the hacienda system could shape outcomes today: (1) The economic structure of the hacienda system as a forced labor system may have shaped the initial distribution of resources that have persisted over time. (2) Hacendados’ political participation in local government may have resulted in social policies and programs that favored landowners over laborers. To test my theory, I use historical land and post office registries to construct an original data set of the location of haciendas in 19th-century Mexico. I expect to find that areas with more historical haciendas experience higher levels of income inequality and more exclusive institutions today compared to areas with fewer historical haciendas. I test this hypothesis using ordinary least squares (OLS) regression models at the municipal level, and, additionally, in the case of exclusive institutions, a graphical analysis at the state level. I ultimately find that areas with haciendas in the past generally have lower levels of income inequality and lower income levels today, and that both of these effects seem to be driven by southern municipalities. I also find that, in Oaxaca, the hacienda system is generally correlated with the existence of exclusive institutions. My thesis makes an important contribution to the literature on the institutions hypothesis by introducing original micro-data from the hacienda system and by shifting my theoretical focus from growth to inequality.