《社会保障概论》课程教学资源（课后阅读资料）APSR_Volume112. Issue 4.Nov 2018_Office-Selling_Corruption_and_Long-Term_Development_in_Peru

American Political Science Review (2018)112.4.971-995 doi:10.1017/S000305541800045X American Political Science Association 2018 Office-Selling,Corruption,and Long-Term Development in Peru JENNY GUARDADO Georgetown University Whe paper uses a unique hand-collected dataset of the prices at which the Spanish Crown sold colo- nial provincial governorships in seventeenth and eighteenth century Peru to examine the impact of colonial officials on long-run development.Combining provincial characteristics with exoge- nous variation in appointment criteria due to the timing of European wars,I first show that provinces with greater extraction potential tended to fetch higher prices and attract worse buyers.In the long run, these high-priced provinces have lower household consumption,schooling,and public good provision The type of governors ruling these provinces likely exacerbated political conflict,ethnic segregation,and undermined institutional trust among the population INTRODUCTION Spain to show how the returns from extraction shape the incentives of worse or more "extractive"gover- he 300-year Spanish rule of the Americas was nors to seek office.Between 1673 and 1751,the Span- carried out,to a large extent,by provincial gov- ish Crown routinely sold provincial offices'in the colo- ernors who had huge discretion over the lives of nial government of Peru and elsewhere2 as a way to their indigenous subjects.While some of these individ- alleviate fiscal crises due to its involvement in costly uals were recognized as competent and honest,con- European wars.Since greater fiscal need pressured the temporaries regard others as little more than"tyrants Crown to trade off individuals'qualities in exchange or thieves"(Solorzano and Pereira,cited by Moreno for revenue.colonial officials were more likely to be 1977,71).Many of these governors bought their posts selected based on their willingness and ability to pay 4 from the Spanish crown during times of fiscal crisis.In and less so on their qualifications or experience. this paper,I use a hand-collected dataset of these prices In particular,office prices show that Peruvian to distinguish the"tyrants or thieves"from other gover- provinces with more opportunities for extraction were nors and investigate their long-run impact on economic in greater demand when the Crown was less se- development within Peru.I find that provinces with lective about who served in the colonies.Follow- worse colonial governors experience economic disad- ing a difference-in-difference strategy,I compare the vantage even hundreds of years after the governors increase in prices as the Crown relaxed its selec- left office,likely because they created a persistent cul- tion criteria-during fiscal crises caused by European ture of political violence,mistrust,and low incentives wars-in provinces with greater potential for profit vis. to culturally assimilate.While other papers focus on a-vis others.Lacking changes in the selectivity crite- how historical institutions explain contemporary un- ria of the Crown and controlling for other possibilities, derdevelopment through property rights or public there should be no substantial difference in the willing- good provision,how the selection and quality of colo- ness to pay for the same province at times of war ver- nial officials impacts long-run growth has been rela- sus peace.Yet,estimates show that war periods lead,on tively overlooked in this context. average,to a 16%difference in the prices of provinces First,I take advantage of a unique market for colo- with greater potential to profit from a key extractive nial offices in seventeenth and eighteenth century activity (known as repartimiento).This result translates into more than three times the yearly wage of a military captain in the Spanish army at the time.3 The finding is Jenny Guardado is an Assistant Professor,Georgetown University, 3700 O St.NW.ICC 484 (jgr45@georgetown.edu). not driven by common-year or fixed-provincial traits. I am grateful to Scott Abramson,Alberto Diaz-Cayeros.Oein- There is also no evidence that the increase in office drila Dube,Sanford Gordon.Jens Hainmueller.Noel Johnson.Mark prices reflects changes in the attractiveness of Peruvian Koyama.Horacio Larreguy,Steven Pennings,Adam Przeworski. provinces during European wars,or selectivity in sales Pablo Querubin.Shanker Satvanath.David Stasavage.Leonard Wantchekon,Tianyang Xi,and seminar participants at LSE,Har- by the Crown,among other explanations. vard,UNC Chapel Hill,Georgetown,UChicago-Harris School, Rather,the jump in office prices seems to capture UChicago-Politics,Stanford,George Mason,Princeton, UCSD. the willingness of "worse"colonial officials to pay for Emory,ITAM,and conference participants of the 2016 Ridge- high-profit offices during wartime.Data on buyers' LACEA PEG Workshop,2014 Empirical Political Economy Net- work Conference,2014 International Economics Association,2013 traits show that provinces with greater opportunities Northeast University Development Consortium (NEUDC),2013 for extraction were more likely to be bought by indi- American Political Science Association Conference,2013 Interna- viduals of lower social status during wars.Given that tional Society for New Institutional Economics,2013 Alexander in eighteenth century Spain the nobility and military Hamilton Conference,2013 Midwest Political Science Association classes faced greater social and reputation costs from Conference.10th Midwest International Economic Development Conference,NYU Dissertation Seminar as well as three anonymous referees for valuable comments on this paper.All remaining errors are my own.Replication files are available on the American Political I use the terms“governor,.”“governorship,”and“provincial office” Science Review Dataverse:https://doi.org/10.7910/DVN/TI5BPV. interchangeably,as they all refer to the same position (corregidores). The Crown sold government positions across all its territories,as Received:July 7 2016;revised:March 2,2017;accepted:July 5,2018. well as other treasury,military,and ecclesiastical offices. First published online:August 22,2018. Approximately 850 pesos. 971

American Political Science Review (2018) 112, 4, 971–995 doi:10.1017/S000305541800045X © American Political Science Association 2018 Office-Selling, Corruption, and Long-Term Development in Peru JENNY GUARDADO Georgetown University The paper uses a unique hand-collected dataset of the prices at which the Spanish Crown sold colo￾nial provincial governorships in seventeenth and eighteenth century Peru to examine the impact of colonial officials on long-run development. Combining provincial characteristics with exoge￾nous variation in appointment criteria due to the timing of European wars, I first show that provinces with greater extraction potential tended to fetch higher prices and attract worse buyers. In the long run, these high-priced provinces have lower household consumption, schooling, and public good provision. The type of governors ruling these provinces likely exacerbated political conflict, ethnic segregation, and undermined institutional trust among the population. INTRODUCTION The 300-year Spanish rule of the Americas was carried out, to a large extent, by provincial gov￾ernors who had huge discretion over the lives of their indigenous subjects. While some of these individ￾uals were recognized as competent and honest, con￾temporaries regard others as little more than “tyrants or thieves” (Solorzano and Pereira, cited by Moreno 1977, 71). Many of these governors bought their posts from the Spanish crown during times of fiscal crisis. In this paper, I use a hand-collected dataset of these prices to distinguish the “tyrants or thieves” from other gover￾nors and investigate their long-run impact on economic development within Peru. I find that provinces with worse colonial governors experience economic disad￾vantage even hundreds of years after the governors left office, likely because they created a persistent cul￾ture of political violence, mistrust, and low incentives to culturally assimilate. While other papers focus on how historical institutions explain contemporary un￾derdevelopment through property rights or public good provision, how the selection and quality of colo￾nial officials impacts long-run growth has been rela￾tively overlooked in this context. First, I take advantage of a unique market for colo￾nial offices in seventeenth and eighteenth century Jenny Guardado is an Assistant Professor, Georgetown University, 3700 O St. NW, ICC 484 (jgr45@georgetown.edu). I am grateful to Scott Abramson, Alberto Diaz-Cayeros, Oein￾drila Dube, Sanford Gordon, Jens Hainmueller, Noel Johnson, Mark Koyama, Horacio Larreguy, Steven Pennings, Adam Przeworski, Pablo Querubin, Shanker Satyanath, David Stasavage, Leonard Wantchekon, Tianyang Xi, and seminar participants at LSE, Har￾vard, UNC Chapel Hill, Georgetown, UChicago—Harris School, UChicago—Politics, Stanford, George Mason, Princeton, UCSD, Emory, ITAM, and conference participants of the 2016 Ridge￾LACEA PEG Workshop, 2014 Empirical Political Economy Net￾work Conference, 2014 International Economics Association, 2013 Northeast University Development Consortium (NEUDC), 2013 American Political Science Association Conference, 2013 Interna￾tional Society for New Institutional Economics, 2013 Alexander Hamilton Conference, 2013 Midwest Political Science Association Conference, 10th Midwest International Economic Development Conference, NYU Dissertation Seminar as well as three anonymous referees for valuable comments on this paper. All remaining errors are my own. Replication files are available on the American Political Science Review Dataverse: https://doi.org/10.7910/DVN/TI5BPV. Received: July 7, 2016; revised: March 2, 2017; accepted: July 5, 2018. First published online: August 22, 2018. Spain to show how the returns from extraction shape the incentives of worse or more “extractive” gover￾nors to seek office. Between 1673 and 1751, the Span￾ish Crown routinely sold provincial offices1 in the colo￾nial government of Peru and elsewhere2 as a way to alleviate fiscal crises due to its involvement in costly European wars. Since greater fiscal need pressured the Crown to trade off individuals’ qualities in exchange for revenue, colonial officials were more likely to be selected based on their willingness and ability to pay and less so on their qualifications or experience. In particular, office prices show that Peruvian provinces with more opportunities for extraction were in greater demand when the Crown was less se￾lective about who served in the colonies. Follow￾ing a difference-in-difference strategy, I compare the increase in prices as the Crown relaxed its selec￾tion criteria—during fiscal crises caused by European wars—in provinces with greater potential for profit vis￾a-vis others. Lacking changes in the selectivity crite￾ria of the Crown and controlling for other possibilities, there should be no substantial difference in the willing￾ness to pay for the same province at times of war ver￾sus peace. Yet, estimates show that war periods lead, on average, to a 16% difference in the prices of provinces with greater potential to profit from a key extractive activity (known as repartimiento). This result translates into more than three times the yearly wage of a military captain in the Spanish army at the time.3 The finding is not driven by common-year or fixed-provincial traits. There is also no evidence that the increase in office prices reflects changes in the attractiveness of Peruvian provinces during European wars, or selectivity in sales by the Crown, among other explanations. Rather, the jump in office prices seems to capture the willingness of “worse” colonial officials to pay for high-profit offices during wartime. Data on buyers’ traits show that provinces with greater opportunities for extraction were more likely to be bought by indi￾viduals of lower social status during wars. Given that in eighteenth century Spain the nobility and military classes faced greater social and reputation costs from 1 I use the terms “governor,” “governorship,” and “provincial office” interchangeably, as they all refer to the same position (corregidores). 2 The Crown sold government positions across all its territories, as well as other treasury, military, and ecclesiastical offices. 3 Approximately 850 pesos. 971 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S000305541800045X

Jenny Guardado disloyalty to the Crown,and were considered more development (e.g.,Nunn and Wantchekon 2011).The competent and morally upright in office,these results most direct effect of exploitation and violence was thus are consistent with historians'descriptions of the ad- a reduction of trust in public institutions such as the vent of "worse"colonial officials due to office-selling electoral system,potentially undermining the efficient (Ramos Gomez 1985;Lohmann Villena 1957;Moreno functioning of government. 1977,71;Sanz Tapia2009,43) More generally,it is likely that persistent exploita- After using office prices and individual traits to doc- tion led the Peruvian indigenous population to limit ument potential negative selection.I then examine how their interactions with colonial authorities and Span- this class of rulers may have impacted long-run devel- ish settlers leading to low cultural assimilation (Diaz- opment within Peru.The main empirical challenge is Cayeros 2011).Yet,such a lack of assimilation may that factors rendering certain offices more valuable to be economically costly in the long run due to the loss "tyrants or thieves"may also affect long-run economic in potential gains from interactions with the majority outcomes in ways that have nothing to do with the type (and richer)group (Lazear 1999).In the case of Peru- of government officials.To distinguish between these vian provinces,the ethnic segregation of the indigenous effects,I focus on the difference or gap in office prices population started to become visible post office-selling at times of low oversight(during wars)relative to peri- (1780).worsened in the nineteenth century (1876).and ods of high oversight(during peace).Because province is even higher in contemporary times(2013). fundamentals in Peru are unlikely to vary between war To the best of my knowledge,this is the first study to and peace times in Europe,price differences likely cap- use office prices to examine negative selection into gov- ture shifts in the selectivity criteria of the Crown due to ernment positions and their long-term impact.Existing fiscal considerations and not other factors studies have clearly laid out the problem of politica Results using this approach show that a 30%increase selection(Besley 2005)and the returns to public office in the average office price sold during wartime leads to (Querubin and Snyder 2013;Eggers and Hainmueller a 9.6%reduction in the average household consump- 2009)but have not examined the link between returns tion today.Higher prices also reduce years of schooling obtained while in office and lasting political and eco- and public good provision.Because all specifications nomic underdevelopment. include the prices paid during peace(a time of greater In particular,this paper shows that the type of lo- selectivity),this estimate accounts for provincial traits cal rulers is a key mechanism explaining the long-run that do not vary between war and peace times.In fact, impact of colonial institutions.While a number of stud- additional analyses show that the gap in office prices is ies document the legacy of colonial institutions on de- unrelated to a host of slow-changing geographic,demo- velopment(Engerman and Sokoloff 1997;Coatsworth graphic and economic traits that could plausibly affect 2008;Acemoglu,Johnson,and Robinson 2001,2002: development in the long run.Moreover,regional eco- Banerjee and Iyer 2005;Bruhn and Gallego 2012;Dell nomic disparities are already visible by 1827-just af- 2010),part of this effect may be driven by attracting ter Peru gained independence-suggesting the impor- certain types of colonial officials in the first place.4 In tance of colonial rather than postcolonial factors. other words,low-quality individuals sorting into certain Exploitation by more extractive governors often led offices partly explains why institutions impact current to rebellions by the indigenous population.These re- development across subnational regions in Peru. bellions were usually brutally put down,creating fur- The paper also relates to the literature on social ther resentment and a cycle of persistent conflict.Us connections and bureaucratic performance.Although ing detailed data on local rebellions for eighteenth some studies find social connections detrimental to bu- century Peru,and following the same specification reaucratic performance(Xu 2017),others suggest they as before,I find that provinces with higher prices may help screen officials and improve performance in paid during European wars experience a higher num- office (Jia,Kudamatsu,and Seim 2015:Allen 2005).In ber of spontaneous uprisings against their colonial colonial Peru,the temporary shift in the type of offi- rulers in the office-selling period(1673-1751)than im- cials governing the colony coincided with more polit- mediately afterward (1752-1780).Additional results ical conflict in the short and long run,indicating that from a panel specification-thus controlling for fixed social connections may have helped the Crown screen provincial traits and common-year factors-are con- and incentivize officials compared to those who en- sistent with these findings.Furthermore,this relation- tered office via office-selling. ship is still visible in recent times:districts with higher Finally,these results document the role of conflict prices in the seventeenth and eighteenth centuries in magnifying and perpetuating the impact of histori- also exhibit greater initial support for anti-government cal events.Given the wide-ranging impact of conflict Maoist guerrillas in the 1980s (Shining Path).Given on income,health,human capital,and other economic that frequent political violence discourages investment outcomes,its recurrence may help explain regional dis in physical and human capital,and reduces the effec- parities not only in Peru but also in other settings where tiveness of government,it is unsurprising that these its persistence has been well documented(e.g.,Besley L high-priced provinces exhibit lower levels of consump. and Reynal-Querol 2014.for sub-Saharan Africa). tion,schooling and public good provision today. Exploitation and political violence also exerted a Acemoglu,Johnson,and Robinson(2001)imply that officials will long-run effect on culture and trust,which a recent lit- ing to go to high settler mortality areas would be most likely extrac- erature has argued has important effects on economic tive.This paper complements this view. 972

Jenny Guardado disloyalty to the Crown, and were considered more competent and morally upright in office, these results are consistent with historians’ descriptions of the ad￾vent of “worse” colonial officials due to office-selling (Ramos Gomez 1985; Lohmann Villena 1957; Moreno 1977, 71; Sanz Tapia 2009, 43). After using office prices and individual traits to doc￾ument potential negative selection, I then examine how this class of rulers may have impacted long-run devel￾opment within Peru. The main empirical challenge is that factors rendering certain offices more valuable to “tyrants or thieves” may also affect long-run economic outcomes in ways that have nothing to do with the type of government officials. To distinguish between these effects, I focus on the difference or gap in office prices at times of low oversight (during wars) relative to peri￾ods of high oversight (during peace). Because province fundamentals in Peru are unlikely to vary between war and peace times in Europe, price differences likely cap￾ture shifts in the selectivity criteria of the Crown due to fiscal considerations and not other factors. Results using this approach show that a 30% increase in the average office price sold during wartime leads to a 9.6% reduction in the average household consump￾tion today. Higher prices also reduce years of schooling and public good provision. Because all specifications include the prices paid during peace (a time of greater selectivity), this estimate accounts for provincial traits that do not vary between war and peace times. In fact, additional analyses show that the gap in office prices is unrelated to a host of slow-changing geographic, demo￾graphic and economic traits that could plausibly affect development in the long run. Moreover, regional eco￾nomic disparities are already visible by 1827—just af￾ter Peru gained independence—suggesting the impor￾tance of colonial rather than postcolonial factors. Exploitation by more extractive governors often led to rebellions by the indigenous population. These re￾bellions were usually brutally put down, creating fur￾ther resentment and a cycle of persistent conflict. Us￾ing detailed data on local rebellions for eighteenth century Peru, and following the same specification as before, I find that provinces with higher prices paid during European wars experience a higher num￾ber of spontaneous uprisings against their colonial rulers in the office-selling period (1673–1751) than im￾mediately afterward (1752–1780). Additional results from a panel specification—thus controlling for fixed provincial traits and common-year factors—are con￾sistent with these findings. Furthermore, this relation￾ship is still visible in recent times: districts with higher prices in the seventeenth and eighteenth centuries also exhibit greater initial support for anti-government Maoist guerrillas in the 1980s (Shining Path). Given that frequent political violence discourages investment in physical and human capital, and reduces the effec￾tiveness of government, it is unsurprising that these high-priced provinces exhibit lower levels of consump￾tion, schooling and public good provision today. Exploitation and political violence also exerted a long-run effect on culture and trust, which a recent lit￾erature has argued has important effects on economic development (e.g., Nunn and Wantchekon 2011). The most direct effect of exploitation and violence was thus a reduction of trust in public institutions such as the electoral system, potentially undermining the efficient functioning of government. More generally, it is likely that persistent exploita￾tion led the Peruvian indigenous population to limit their interactions with colonial authorities and Span￾ish settlers leading to low cultural assimilation (Diaz￾Cayeros 2011). Yet, such a lack of assimilation may be economically costly in the long run due to the loss in potential gains from interactions with the majority (and richer) group (Lazear 1999). In the case of Peru￾vian provinces, the ethnic segregation of the indigenous population started to become visible post office-selling (1780), worsened in the nineteenth century (1876), and is even higher in contemporary times (2013). To the best of my knowledge, this is the first study to use office prices to examine negative selection into gov￾ernment positions and their long-term impact. Existing studies have clearly laid out the problem of political selection (Besley 2005) and the returns to public office (Querubin and Snyder 2013; Eggers and Hainmueller 2009) but have not examined the link between returns obtained while in office and lasting political and eco￾nomic underdevelopment. In particular, this paper shows that the type of lo￾cal rulers is a key mechanism explaining the long-run impact of colonial institutions.While a number of stud￾ies document the legacy of colonial institutions on de￾velopment (Engerman and Sokoloff 1997; Coatsworth 2008; Acemoglu, Johnson, and Robinson 2001, 2002; Banerjee and Iyer 2005; Bruhn and Gallego 2012; Dell 2010), part of this effect may be driven by attracting certain types of colonial officials in the first place.4 In other words,low-quality individuals sorting into certain offices partly explains why institutions impact current development across subnational regions in Peru. The paper also relates to the literature on social connections and bureaucratic performance. Although some studies find social connections detrimental to bu￾reaucratic performance (Xu 2017), others suggest they may help screen officials and improve performance in office (Jia, Kudamatsu, and Seim 2015; Allen 2005). In colonial Peru, the temporary shift in the type of offi￾cials governing the colony coincided with more polit￾ical conflict in the short and long run, indicating that social connections may have helped the Crown screen and incentivize officials compared to those who en￾tered office via office-selling. Finally, these results document the role of conflict in magnifying and perpetuating the impact of histori￾cal events. Given the wide-ranging impact of conflict on income, health, human capital, and other economic outcomes, its recurrence may help explain regional dis￾parities not only in Peru but also in other settings where its persistence has been well documented (e.g., Besley and Reynal-Querol 2014, for sub-Saharan Africa). 4 Acemoglu, Johnson, and Robinson (2001) imply that officials will￾ing to go to high settler mortality areas would be most likely extrac￾tive. This paper complements this view. 972 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S000305541800045X

Office-Selling,Corruption,and Long-Term Development in Peru BACKGROUND-SALE OF PUBLIC OFFICES According to contemporaries,the office-selling episode proved "demoralizing"to longstanding of- The sale of public offices was a common practice in ficials and high-status individuals in the Americas settings as diverse as France,England,the Ottoman (benemeritos)who expected a position in the colonial Empire,and China(Swart 1980).In the case of Spain. administration after a lifetime of service (Moreno office-selling was used in the early sixteenth century to 1977,80 citing Cespedes del Castillo 1961).That is, allocate minor posts and nobility titles.Yet it only be- "deserving"individuals had to watch how positions came an important mechanism to select colonial gover- were granted to those lacking "merit"(Moreno 1977, nors in the late seventeenth century(Parry 1953)when the Hapsburg King Charles II began to exchange colo- 75),"competence and probity"(Lohman 1957,130), or the "preparation or vocation"to serve (Sanz nial governorships for money. Tapia 2009,43).Although certainly appointment by That is,prior to the 1670s,colonial governorships were generally allocated to individuals who fulfilled patronage(as opposed to sales)does not preclude low- quality individuals from entering office.the constraints certain requisites or who provided "services"to the imposed by social status and the potential for better Crown (Sanz Tapia 2009,50).According to the laws screening were less likely among those purchasing governing the Indies,ideal governors were those with positions. 'lineage,prudence and good manners."For instance, governors were not to be of"low social status,humble origins or come from manual occupations"(Lohmann Provincial Governors (Corregidores) 元 Villena 1957,98).While this preference for high so- cial status bureaucrats can be interpreted as classism,it Among all positions sold,that of provincial governor, actually served key functions in premodern bureaucra- or corregidor,was highly demanded(Sanz Tapia 2009. cies,such as inducing loyalty (Parry 1953,2)or con- 89).This,despite the fact that provincial governorships were not particularly prestigious,there were no guar- veying private information.In fact,among eighteenth century observers,patronage was preferable to sales antees of further appointments after the five-year term in office,and the task of governing the often unruly in- because it provided a reason for officials to behave with "reason and justice"whereas selling positions was akin digenous population of Peru could cost officials their lives.Moreover,wages paid to officials were a rather to the Crown "consenting"to the extorsion of the in- small.stagnant.and insufficient amount for the task at digenous population in the colonies (Ramos Gomez hand and the risks involved(Moreno 1977).6 It is telling 1985.174).The logic is similar to that of seventeenth that when the Crown tried to improve the performance century Britain where "..what policed the behavion of governors by the late eighteenth century,the main of the office-holder was the threat of expulsion from the aristocracy,loss of the benefits of office,and the loss proposals centered around increasing wages and cre- governors of social capital if caught or suspected of acting outside ating a career-based system so that“good” the interest of the patron"(Allen 2005,62). could be promoted to future posts (Moreno 1977.604). Despite these known concerns with office-selling,the These proposals never materialized. dire financial situation of the Crown circa 1670-during Two main avenues existed to purchase the position of provincial governor.?First,the Council of Indies the Franco-Dutch war-led to the systematic sale of made public available vacancies with a twenty-day limit colonial governorships.The decision was framed as an in the royal court in Madrid to receive files(Sanz Tapia emergency (and temporary)measure to face "pressing 2009.89).3 Interested candidates would send sealed let- needs"(urgencias presentes)from warfare.Although 8 the negative consequences from office-selling were ters with their qualifications and the price offered for well-known and legal scholars strongly condemned it the position.The King-through the Royal Chamber- would then assess the merits and bids of candidates and at the time(Parry 1953,1),the policy remained in place usually chose the highest bidder(Sanz Tapia 2009,93). due to a combination of persistent fiscal weakness and The second,and by far the most frequently taken av- direct benefits accruing to members of the court in enue.was the purchase of positions years in advance of volved in it (Sanz Tapia 1998).For example,once Philip potentially taking office (futuras).in which individuals V took office in 1701,he vowed to improve governance in the colonies and revoked all appointments sold in directly(or via intermediaries)approached the Crown and offered a payment for the position.In these cases. the last 10 years by his predecessor.Yet,these inten- the Crown decided whether or not to accept the offer tions proved short-lived,since as early as 1705-during the war of the Spanish succession-Philip himself be. yet,it was well known that interested candidates could gan to sell governorships citing the prospect of poten- greatly improve the likelihood of securing the appoint- tial military defeat in Europe and subsequent disinte- ment by offering higher prices(Moreno 1977,75 citing gration of the Spanish Empire(Burkholder and Chan- Castillo de Bobadilla 1759 I(I),48). dler 1977).The practice would only end definitely in 1751,during an Empire-wide effort to modernize gov- Wages were also subject to a one-time tax (media anata),and were ernment,known as the Bourbon Reforms. susceptible to be retained by the monarch for "emergency"reasons See Table A.1 in the Appendix for the wages prevailing during office- selling. 7 The sale process is different for nongovernor offices.See Parry 1953). In these cases,ownership of the office is not transferred to the pur- Those residing in the Americas relied on an agent with the power chaser in perpetuity. of attorney to purchase the position. 973

Office-Selling, Corruption, and Long-Term Development in Peru BACKGROUND—SALE OF PUBLIC OFFICES The sale of public offices was a common practice in settings as diverse as France, England, the Ottoman Empire, and China (Swart 1980). In the case of Spain, office-selling was used in the early sixteenth century to allocate minor posts and nobility titles. Yet it only be￾came an important mechanism to select colonial gover￾nors in the late seventeenth century (Parry 1953) when the Hapsburg King Charles II began to exchange colo￾nial governorships for money.5 That is, prior to the 1670s, colonial governorships were generally allocated to individuals who fulfilled certain requisites or who provided “services” to the Crown (Sanz Tapia 2009, 50). According to the laws governing the Indies, ideal governors were those with “lineage, prudence and good manners.” For instance, governors were not to be of “low social status, humble origins or come from manual occupations” (Lohmann Villena 1957, 98). While this preference for high so￾cial status bureaucrats can be interpreted as classism, it actually served key functions in premodern bureaucra￾cies, such as inducing loyalty (Parry 1953, 2) or con￾veying private information. In fact, among eighteenth century observers, patronage was preferable to sales because it provided a reason for officials to behave with “reason and justice” whereas selling positions was akin to the Crown “consenting” to the extorsion of the in￾digenous population in the colonies (Ramos Gomez 1985, 174). The logic is similar to that of seventeenth century Britain where “[...] what policed the behavior of the office-holder was the threat of expulsion from the aristocracy,loss of the benefits of office, and the loss of social capital if caught or suspected of acting outside the interest of the patron” (Allen 2005, 62). Despite these known concerns with office-selling, the dire financial situation of the Crown circa 1670—during the Franco-Dutch war—led to the systematic sale of colonial governorships. The decision was framed as an emergency (and temporary) measure to face “pressing needs” (urgencias presentes) from warfare. Although the negative consequences from office-selling were well-known and legal scholars strongly condemned it at the time (Parry 1953, 1), the policy remained in place due to a combination of persistent fiscal weakness and direct benefits accruing to members of the court in￾volved in it (Sanz Tapia 1998). For example, once Philip V took office in 1701, he vowed to improve governance in the colonies and revoked all appointments sold in the last 10 years by his predecessor. Yet, these inten￾tions proved short-lived, since as early as 1705—during the war of the Spanish succession—Philip himself be￾gan to sell governorships citing the prospect of poten￾tial military defeat in Europe and subsequent disinte￾gration of the Spanish Empire (Burkholder and Chan￾dler 1977). The practice would only end definitely in 1751, during an Empire-wide effort to modernize gov￾ernment, known as the Bourbon Reforms. 5 In these cases, ownership of the office is not transferred to the pur￾chaser in perpetuity. According to contemporaries, the office-selling episode proved “demoralizing” to longstanding of￾ficials and high-status individuals in the Americas (benemeritos) who expected a position in the colonial administration after a lifetime of service (Moreno 1977, 80 citing Cespedes del Castillo 1961). That is, “deserving” individuals had to watch how positions were granted to those lacking “merit” (Moreno 1977, 75), “competence and probity” (Lohman 1957, 130), or the “preparation or vocation” to serve (Sanz Tapia 2009, 43). Although certainly appointment by patronage (as opposed to sales) does not preclude low￾quality individuals from entering office, the constraints imposed by social status and the potential for better screening were less likely among those purchasing positions. Provincial Governors (Corregidores) Among all positions sold, that of provincial governor, or corregidor, was highly demanded (Sanz Tapia 2009, 89). This, despite the fact that provincial governorships were not particularly prestigious, there were no guar￾antees of further appointments after the five-year term in office, and the task of governing the often unruly in￾digenous population of Peru could cost officials their lives. Moreover, wages paid to officials were a rather small, stagnant, and insufficient amount for the task at hand and the risks involved (Moreno 1977).6 It is telling that when the Crown tried to improve the performance of governors by the late eighteenth century, the main proposals centered around increasing wages and cre￾ating a career-based system so that “good” governors could be promoted to future posts (Moreno 1977, 604). These proposals never materialized. Two main avenues existed to purchase the position of provincial governor.7 First, the Council of Indies made public available vacancies with a twenty-day limit in the royal court in Madrid to receive files (Sanz Tapia 2009, 89).8 Interested candidates would send sealed let￾ters with their qualifications and the price offered for the position.The King—through the Royal Chamber— would then assess the merits and bids of candidates and usually chose the highest bidder (Sanz Tapia 2009, 93). The second, and by far the most frequently taken av￾enue, was the purchase of positions years in advance of potentially taking office (futuras), in which individuals directly (or via intermediaries) approached the Crown and offered a payment for the position. In these cases, the Crown decided whether or not to accept the offer, yet, it was well known that interested candidates could greatly improve the likelihood of securing the appoint￾ment by offering higher prices (Moreno 1977, 75 citing Castillo de Bobadilla 1759 I(I), 48). 6 Wages were also subject to a one-time tax (media anata), and were susceptible to be retained by the monarch for “emergency” reasons. See Table A.1 in the Appendix for the wages prevailing during office￾selling. 7 The sale process is different for nongovernor offices. See Parry (1953). 8 Those residing in the Americas relied on an agent with the power of attorney to purchase the position. 973 Downloaded from https://www.cambridge.org/core. 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Jenny Guardado Although,in theory,the Crown tried to select in- collecting payments were important in determining the dividuals of proven quality-originally from Spain extractive value of certain offices versus others and the of high social status,or military background-it was governor's willingness to pay. often willing to undermine its own standards in ex- Aside from repartimiento,governors were also change for money.For instance,some individuals liv- known to overtax the population when collecting the ing in the colonies were able to buy positions despite yearly head tax(tributo)that every indigenous person clear conflicts of interest,such as ruling the provinces owed to the Spanish Crown.Governors often extorted they resided in,considered inappropriate at the time amounts above the permitted legal amount,from those (Sanz Tapia 2009,89).Similarly,although governors exempted (e.g.,mestizos),and even forced families to were barred from ruling the same province more than pay for those who were absent due to death or migra- once-as a way to prevent corruption-the Crown tion.Moreover.funds from local taxes earmarked for was ready to make exceptions if rewarded accordingly. hospitals or other public works were often used for the Other regulations established that governorships were governors'own purposes (Andrien 1984.13-14). not to be transferred to a third party.However,dur- Finally,governors also benefited from mobilizing la- ing the office-selling period,the Crown agreed to such bor in their province for a profit.For instance,they exchanges.As a result,governor titles became little would"lease"workers to neighboring haciendas in ex- more than a commodity:appointments were purchased change for 2/3 of the wage owed to the workers(An- a number of years in advance and it was possible to drien 1984).Governors serving in provinces forced to bequest them or use them as a dowry for whomever provide labor to the mines (mita)were able to de- married their daughters or nieces.Not surprisingly,in- lay implementation of these regulations in exchange dividuals serving in the colonies would be more likely for greater gains from repartimiento(Mukherjee 2008) to be driven by profit than service (Moreno 1977,71; Or,they would allow individuals to forego the mita al- Sanz Tapia 2009;Lohmann Villena 1957). together in exchange for a fee.In sum,colonial offi- cials found numerous opportunities to profit from their 4 position. Rent Extraction The main attraction for occupying office was that gov- DATA ernors served as tax collectors and"justice administra- tors,"thus exerting considerable leverage among the The data used in this paper comes from several sources. population to engage in extractive activities.The most The time series for the prices of governor positions common of these activities-outlawed at the time of was coded from primary sources located at the Span- office-selling-was repartimiento,or the forced sales of ish Colonial Archives (Archivo General de Indias).I merchandise.The practice entailed the forced distri- collected information on sold and appointed colonial bution of goods and credit to the local population at governorships beginning 1673 until 1751,when the last inflated prices,which kept them in heavy and perma- sale was made.During this 78-year period,62 years or nent debt.Under this arrangement,governors allied 80%of the time saw the sale of at least one Peruvian themselves with merchants in Lima.or in Seville.to province for a total of 518 sales.In terms of appoint- obtain goods and resell them at inflated prices without ments,there were 107 governorships assigned this way. S5.501g the proper consent of locals(Andrien 1984,13).Debt Governor titles also provide information about the per- repayment was ensured by the fact that the governor sonal characteristics of the purchaser,such as social sta- was not only the executive,but also the judicial author- tus.An example of a title of governor can be found in ity in his province (Moreno 1977;Baskes 2000);debtors Figure A.1 and A.2 of the Appendix.All prices account could be flogged,jailed,or have their goods confiscated. for inflation,using changes in the price of silver(base The rents obtained via repartimiento are estimated to vear 1673)provided by Arroyo-Abad (2005).On be at least twice as large as those obtained from forced average,a Peruvian province was sold in 5,300 pesos, labor(mita)and head taxes (tributo)from the indige- which is around 20 times the yearly wage of a military nous population(Golte 1980). captain in the Spanish army at the time.1 Rumors about potential profits from repartimiento To match colonial and current districts,I use the guided the bids for a position.0 For example,in the geographic accounts of Cosme Bueno (1951 [1783]), case of Peru the province of Ica was considered"first- who wrote a detailed description of the parishes in class'”or“high utility”due to the ease in collecting pro- each province and its "annexes,"now districts.Out ceeds from illegal trade activities.while that of Cercado of around 1850 current districts today,it is possible (near the capital)was described as yielding "poor re- to match 967 to their colonial counterpart.Only cur- turns"(Cebrian 1977,78).Not surprisingly,Ica's aver- rent districts identified as being part of the province age price was twice that of Cercado.Hence,factors such in the eighteenth century are included to make sure as circulating currency,taxable markets,and the ease in there are no disparities in the presence of the colonial state at the time.Figure 1 provides a visual represen- L tation of the spatial distribution of office prices among While it is debatable whether repartimiento was a forced activity or not(Baskes 2000),it still entailed monopolistic practices and steep markups on prices for goods and credit. 0 Offices represented a sizeable investment at the time,it is not sur- 1 Prices for positions in what is now Mexico,Bolivia,and Colombia prising that buyers sought information about their value. had similar values. 974

Jenny Guardado Although, in theory, the Crown tried to select in￾dividuals of proven quality—originally from Spain, of high social status, or military background—it was often willing to undermine its own standards in ex￾change for money. For instance, some individuals liv￾ing in the colonies were able to buy positions despite clear conflicts of interest, such as ruling the provinces they resided in, considered inappropriate at the time (Sanz Tapia 2009, 89). Similarly, although governors were barred from ruling the same province more than once—as a way to prevent corruption—the Crown was ready to make exceptions if rewarded accordingly. Other regulations established that governorships were not to be transferred to a third party. However, dur￾ing the office-selling period, the Crown agreed to such exchanges. As a result, governor titles became little more than a commodity: appointments were purchased a number of years in advance and it was possible to bequest them or use them as a dowry for whomever married their daughters or nieces. Not surprisingly, in￾dividuals serving in the colonies would be more likely to be driven by profit than service (Moreno 1977, 71; Sanz Tapia 2009; Lohmann Villena 1957). Rent Extraction The main attraction for occupying office was that gov￾ernors served as tax collectors and “justice administra￾tors,” thus exerting considerable leverage among the population to engage in extractive activities. The most common of these activities—outlawed at the time of office-selling—was repartimiento, or the forced sales of merchandise. The practice entailed the forced distri￾bution of goods and credit to the local population at inflated prices, which kept them in heavy and perma￾nent debt.9 Under this arrangement, governors allied themselves with merchants in Lima, or in Seville, to obtain goods and resell them at inflated prices without the proper consent of locals (Andrien 1984, 13). Debt repayment was ensured by the fact that the governor was not only the executive, but also the judicial author￾ity in his province (Moreno 1977; Baskes 2000); debtors could be flogged,jailed, or have their goods confiscated. The rents obtained via repartimiento are estimated to be at least twice as large as those obtained from forced labor (mita) and head taxes (tributo) from the indige￾nous population (Golte 1980). Rumors about potential profits from repartimiento guided the bids for a position.10 For example, in the case of Peru the province of Ica was considered “first￾class” or “high utility” due to the ease in collecting pro￾ceeds from illegal trade activities, while that of Cercado (near the capital) was described as yielding “poor re￾turns” (Cebrian 1977, 78). Not surprisingly, Ica’s aver￾age price was twice that of Cercado.Hence, factors such as circulating currency, taxable markets, and the ease in 9 While it is debatable whether repartimiento was a forced activity or not (Baskes 2000), it still entailed monopolistic practices and steep markups on prices for goods and credit. 10 Offices represented a sizeable investment at the time, it is not sur￾prising that buyers sought information about their value. collecting payments were important in determining the extractive value of certain offices versus others and the governor’s willingness to pay. Aside from repartimiento, governors were also known to overtax the population when collecting the yearly head tax (tributo) that every indigenous person owed to the Spanish Crown. Governors often extorted amounts above the permitted legal amount, from those exempted (e.g., mestizos), and even forced families to pay for those who were absent due to death or migra￾tion. Moreover, funds from local taxes earmarked for hospitals or other public works were often used for the governors’ own purposes (Andrien 1984, 13–14). Finally, governors also benefited from mobilizing la￾bor in their province for a profit. For instance, they would “lease” workers to neighboring haciendas in ex￾change for 2/3 of the wage owed to the workers (An￾drien 1984). Governors serving in provinces forced to provide labor to the mines (mita) were able to de￾lay implementation of these regulations in exchange for greater gains from repartimiento (Mukherjee 2008). Or, they would allow individuals to forego the mita al￾together in exchange for a fee. In sum, colonial offi￾cials found numerous opportunities to profit from their position. DATA The data used in this paper comes from several sources. The time series for the prices of governor positions was coded from primary sources located at the Span￾ish Colonial Archives (Archivo General de Indias). I collected information on sold and appointed colonial governorships beginning 1673 until 1751, when the last sale was made. During this 78-year period, 62 years or 80% of the time saw the sale of at least one Peruvian province for a total of 518 sales. In terms of appoint￾ments, there were 107 governorships assigned this way. Governor titles also provide information about the per￾sonal characteristics of the purchaser, such as social sta￾tus. An example of a title of governor can be found in Figure A.1 and A.2 of the Appendix.All prices account for inflation, using changes in the price of silver (base year = 1673) provided by Arroyo-Abad (2005). On average, a Peruvian province was sold in 5,300 pesos, which is around 20 times the yearly wage of a military captain in the Spanish army at the time.11 To match colonial and current districts, I use the geographic accounts of Cosme Bueno (1951 [1783]), who wrote a detailed description of the parishes in each province and its “annexes,” now districts. Out of around 1850 current districts today, it is possible to match 967 to their colonial counterpart. Only cur￾rent districts identified as being part of the province in the eighteenth century are included to make sure there are no disparities in the presence of the colonial state at the time. Figure 1 provides a visual represen￾tation of the spatial distribution of office prices among 11 Prices for positions in what is now Mexico, Bolivia, and Colombia had similar values. 974 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S000305541800045X

Office-Selling,Corruption,and Long-Term Development in Peru FIGURE 1.Current Districts and Office measures of office profitability (e.g.,agricultural suit- ability,indicator for market hubs,forced labor assign- Prices ment,and the presence of mines)included in the anal- ysis are described in the Appendix. Data on district-level public good provision comes from the 2007 census by INEI.Other geographic vari- ables such as latitude,longitude,distance to Lima,and elevation (in meters over sea level)comes from the Ministry of Education.Finally,to look at household consumption,individual political attitudes and ethnic composition,I use the 2013 national household census (ENAHO),which includes a sample of around 14,000+ head of households representing 47 out of the 48 colo- nial provinces studied. Because differences in development could be re- flecting differences prior to the office-selling episode, I also collected taxation,budgetary,and demographic data from settlements within colonial provinces (re- ducciones)dating from the first census conducted in Peru between 1571 and 1573(Miranda 1873).These measures provide a baseline against which to compare subsequent economic changes in Peru's corregimientos (provinces)plausibly driven by colonial governors. The proposed channel of persistence is the height- ened political conflict prevailing in provinces since colonial times.Therefore,I use province-level data on the number and type of rebellions occurring through- out the eighteenth century (O'Phelan 1988;Golte 1980).These sources distinguish whether the rebellion 30 is against a provincial governor(corregidor)or against other actors.I also use more contemporary data on conflict collected by the Peruvian Truth and Reconcil- iation Commission(CVR),which recorded individual contemporary districts in Peru.12 As noted,provinces level data on the early patterns of violence by Maoist in the highest price quartile do not necessarily cluster guerrillas during the Peruvian civil conflict (1980- geographically. 2000). To account for variation in the selectivity criteria of Finally,measures of historical income and ethnic the Crown,I use warfare in Europe involving Spain composition come from several sources:the 1780 data 235.5010 as a source of exogenous variation in fiscal needs comes from Vollmer (1967);1827 measures of GDP WarLength,is coded as the duration of years in a given and population were estimated by De Marzi and Diaz war,under the assumption that longer wars tend to (2014);the 1876 ethnic composition data comes from drain the treasury more.The Nine Years'War,for ex- the central statistics office (Direccion de estadistica ample,lasted from 1688 until 1697;hence,1688 is coded del Peru 1878);and finally,contemporary information as one,1689 as two,and so on,and the first year of peace on ethnic identity and language comes from the 2013 is coded as 0.The online appendix describes the Euro- ENAHO survey. pean wars included. Additional details of other variables and descriptive Given the lack of time-varying information on prof- statistics are included in the Appendix. itability,I use the monetary value of the merchan- dise assigned to trade with the indigenous popula- tion (repartimiento)by the 1754 legalization decree PRICES FOR GOVERNORSHIPS AND (Moreno 1977).The idea is that higher quotas proxy EXTRACTION for more repartimiento taking place.3 Other potential In this section,I examine whether certain provinces 12 Figure A.3illustrates the time-variation inoffice prices throughout were particularly sought after for extractive pur- poses.To do so,I start by estimating the change a repartimiento quotas were set at the end of the office. in the prices paid for rent-rich offices when selec- selling period(1754),they may only capture profitable provinces at tivity is low (war)relative to when it is higher that date.To alleviate this concern,I cross-check whether these quo- (peace)for particularly profitable provinces relative tas actually reflect repartimiento by examining the letters sent by ev- ery priest of the Cusco region between 1689 and 1690 denouncing to those less so.Because Peruvian province funda- this practice.Figure A.4 and discussion in the Appendix shows that mentals and profitability are unlikely to vary with Eu- the 1754 repartimiento quotas are also a good proxy of these activities ropean wars-and buyers could improve the likeli- taking place at the start of the office-selling period (1690). hood of securing a position by offering higher prices- 975

Office-Selling, Corruption, and Long-Term Development in Peru FIGURE 1. Current Districts and Office Prices contemporary districts in Peru.12 As noted, provinces in the highest price quartile do not necessarily cluster geographically. To account for variation in the selectivity criteria of the Crown, I use warfare in Europe involving Spain as a source of exogenous variation in fiscal needs. WarLengtht is coded as the duration of years in a given war, under the assumption that longer wars tend to drain the treasury more. The Nine Years’ War, for ex￾ample, lasted from 1688 until 1697; hence, 1688 is coded as one, 1689 as two, and so on, and the first year of peace is coded as 0. The online appendix describes the Euro￾pean wars included. Given the lack of time-varying information on prof￾itability, I use the monetary value of the merchan￾dise assigned to trade with the indigenous popula￾tion (repartimiento) by the 1754 legalization decree (Moreno 1977). The idea is that higher quotas proxy for more repartimiento taking place.13 Other potential 12 Figure A.3 illustrates the time-variation in office prices throughout the period. 13 Because repartimiento quotas were set at the end of the office￾selling period (1754), they may only capture profitable provinces at that date. To alleviate this concern, I cross-check whether these quo￾tas actually reflect repartimiento by examining the letters sent by ev￾ery priest of the Cusco region between 1689 and 1690 denouncing this practice. Figure A.4 and discussion in the Appendix shows that the 1754 repartimiento quotas are also a good proxy of these activities taking place at the start of the office-selling period (1690). measures of office profitability (e.g., agricultural suit￾ability, indicator for market hubs, forced labor assign￾ment, and the presence of mines) included in the anal￾ysis are described in the Appendix. Data on district-level public good provision comes from the 2007 census by INEI. Other geographic vari￾ables such as latitude, longitude, distance to Lima, and elevation (in meters over sea level) comes from the Ministry of Education. Finally, to look at household consumption, individual political attitudes and ethnic composition, I use the 2013 national household census (ENAHO),which includes a sample of around 14,000+ head of households representing 47 out of the 48 colo￾nial provinces studied. Because differences in development could be re￾flecting differences prior to the office-selling episode, I also collected taxation, budgetary, and demographic data from settlements within colonial provinces (re￾ducciones) dating from the first census conducted in Peru between 1571 and 1573 (Miranda 1873). These measures provide a baseline against which to compare subsequent economic changes in Peru’s corregimientos (provinces) plausibly driven by colonial governors. The proposed channel of persistence is the height￾ened political conflict prevailing in provinces since colonial times. Therefore, I use province-level data on the number and type of rebellions occurring through￾out the eighteenth century (O’Phelan 1988; Golte 1980). These sources distinguish whether the rebellion is against a provincial governor (corregidor) or against other actors. I also use more contemporary data on conflict collected by the Peruvian Truth and Reconcil￾iation Commission (CVR), which recorded individual level data on the early patterns of violence by Maoist guerrillas during the Peruvian civil conflict (1980– 2000). Finally, measures of historical income and ethnic composition come from several sources: the 1780 data comes from Vollmer (1967); 1827 measures of GDP and population were estimated by De Marzi and Diaz (2014); the 1876 ethnic composition data comes from the central statistics office (Direccion de estadistica del Peru 1878); and finally, contemporary information on ethnic identity and language comes from the 2013 ENAHO survey. Additional details of other variables and descriptive statistics are included in the Appendix. PRICES FOR GOVERNORSHIPS AND EXTRACTION In this section, I examine whether certain provinces were particularly sought after for extractive pur￾poses. To do so, I start by estimating the change in the prices paid for rent-rich offices when selec￾tivity is low (war) relative to when it is higher (peace) for particularly profitable provinces relative to those less so. Because Peruvian province funda￾mentals and profitability are unlikely to vary with Eu￾ropean wars—and buyers could improve the likeli￾hood of securing a position by offering higher prices— 975 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S000305541800045X

Jenny Guardado FIGURE 2.Year to Year Price Differences in High versus Low Repartimiento Provinces.War periods shaded. 00 0 0 000.5 + r● 1680 1700 1720 1740 1760 Year Difference in Prices o High Reparto x Low Reparto substantial price increases are a sign of greater demand where Log(Pricei)represents the real price paid for for office. province i in bishop region j in year t;a and y cap- The empirical analysis thus follows a difference-in- tures provincial and year fixed effects,respectively.Xij differences approach by interacting the cross-sectional includes time-varying controls such as anti-governor variation in provincial profitability with plausibly ex- rebellions;Repartimientoi represents either a contin- ogenous time-variation in the likelihood of "low- uous measure of repartimiento quotas or an indicator quality"types to successfully bid for a position for provinces above or below the median of assigned during wars.Because European wars were fiscally oner- quotas (HighReparto);WarLength,is either the dura- ous to the Spanish treasury,the Crown was more tion of war in a given year,or the simple presence of in- 115.5010 likely to trade off "quality"for revenue at this time ternational conflict involving Spain (War,).Finally,Wit relative to others.More importantly,given the on- captures yearly trends for each of the seven different set and length of wars is largely driven by geopoliti- bishop regions to account for differential price trends. cal calculations in Europe they are thus less suscepti- In terms of standard errors,it is important to ac- ble to strategic timing:sales are driven by emergency count for serial correlation in office prices within a needs rather than by other considerations.In terms province.Because the number of clusters (44 or 48) of cross-sectional variation,I use the repartimiento is not large enough relative to the vector of fixed ef- quotas assigned to each province in 1754 which,for fects,time effects,and differential trends,standard er- many,was the main attraction behind serving in the rors clustered at the province level may be less cred- colonies. ible.Instead,I compute significance levels using wild By comparing provinces with high versus low repar- cluster bootstrap with the null hypothesis imposed as timiento during war and peace times,it is possible suggested by Cameron,Gehlbach,and Miller(2008). to capture shifts in the willingness to pay not driven Figure 2 provides some descriptive evidence by by province fundamentals.Furthermore,competing ex- showing the year to year difference in average office planations that either do not vary greatly within a prices for provinces with high and low repartimiento province over time (e.g.,prestige,location)or would throughout the period.As noted,price differences are not be different for positions with greater access to likely to be larger (more positive)during wartime rents precisely at times of greater scrutiny or not (e.g., periods (shaded)and smaller during peace (more altruism,career benefits),are also unlikely to be driving negative).However,given some exceptions are visi- the results.I thus estimate the following: ble,it is important to examine this relationship more systematically. Estimates from Table 1 show that provinces with Log(Priceiit)=aij+y+B(Repartimientoij x War) greater potential for profit via repartimiento fetch +Xiit +Wit+eiit, 1) higher prices relative to other provinces,particularly 976

Jenny Guardado FIGURE 2. Year to Year Price Differences in High versus Low Repartimiento Provinces. War periods shaded. substantial price increases are a sign of greater demand for office. The empirical analysis thus follows a difference-in￾differences approach by interacting the cross-sectional variation in provincial profitability with plausibly ex￾ogenous time-variation in the likelihood of “low￾quality” types to successfully bid for a position during wars.Because European wars were fiscally oner￾ous to the Spanish treasury, the Crown was more likely to trade off “quality” for revenue at this time relative to others. More importantly, given the on￾set and length of wars is largely driven by geopoliti￾cal calculations in Europe they are thus less suscepti￾ble to strategic timing: sales are driven by emergency needs rather than by other considerations. In terms of cross-sectional variation, I use the repartimiento quotas assigned to each province in 1754 which, for many, was the main attraction behind serving in the colonies. By comparing provinces with high versus low repar￾timiento during war and peace times, it is possible to capture shifts in the willingness to pay not driven by province fundamentals. Furthermore, competing ex￾planations that either do not vary greatly within a province over time (e.g., prestige, location) or would not be different for positions with greater access to rents precisely at times of greater scrutiny or not (e.g., altruism, career benefits), are also unlikely to be driving the results. I thus estimate the following: Log(Pricei jt) = αi j + γt + β(Repartimientoi j × Wart) + Xi jt + Wjt + i jt, (1) where Log(Priceijt) represents the real price paid for province i in bishop region j in year t; αij and γ t cap￾tures provincial and year fixed effects, respectively. Xi jt includes time-varying controls such as anti-governor rebellions; Repartimientoij represents either a contin￾uous measure of repartimiento quotas or an indicator for provinces above or below the median of assigned quotas (HighReparto); WarLengtht is either the dura￾tion of war in a given year, or the simple presence of in￾ternational conflict involving Spain (Wart). Finally, Wjt captures yearly trends for each of the seven different bishop regions to account for differential price trends. In terms of standard errors, it is important to ac￾count for serial correlation in office prices within a province. Because the number of clusters (44 or 48) is not large enough relative to the vector of fixed ef￾fects, time effects, and differential trends, standard er￾rors clustered at the province level may be less cred￾ible. Instead, I compute significance levels using wild cluster bootstrap with the null hypothesis imposed as suggested by Cameron, Gehlbach, and Miller (2008). Figure 2 provides some descriptive evidence by showing the year to year difference in average office prices for provinces with high and low repartimiento throughout the period. As noted, price differences are likely to be larger (more positive) during wartime periods (shaded) and smaller during peace (more negative). However, given some exceptions are visi￾ble, it is important to examine this relationship more systematically. Estimates from Table 1 show that provinces with greater potential for profit via repartimiento fetch higher prices relative to other provinces, particularly 976 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S000305541800045X

Office-Selling,Corruption,and Long-Term Development in Peru TABLE 1.Office Prices and Repartimiento (1) (2) (3) DV:Log Prices(pesos) Panel A:Baseline WarLength x HighRepartimiento 0.019** 0.019** 0.016* (0.005) (0.005) (0.013) 0.0261 [0.0261 [0.0361 R-squared 0.833 0.833 0.828 Panel B:War Indicator War x HighRepartimiento 0.163* 0.164* 0.140* (0.036) (0.036) (0.066) [0.12] [0.11 [0.11] R-squared 0.831 0.831 0.827 Panel C:Continuous Repartimiento Measure WarLength x Repartimiento 0.014* 0.014* 0.011* (0.029) (0.029) (0.076) i0.0o1 i0.0o] i0.0o] R-squared 0.831 0.831 0.827 Mean DV 8.216 8.216 8.238 Observations 463 463 502 Provinces 44 44 48 Rebellion indicator No Yes Yes Provinces Bolivia No No Yes p-values in parentheses.Cluster-robust wild-bootstrap p-values in brackets All specifications include province FE,year FE,and time-trends for individual bishop regions.Bolivia provinces are four provinces ruled by the Audiencia of Charcas at the time (not Lima)but currently part of Peru.***p<0.01,**p< 0.05,p<0.1 when the Crown is less selective (during war).In terms the continuous measure of repartimiento with similar of magnitude,the coefficient of 0.019 in column 1.Panel results.In general,estimates do not change much when A,suggests that for provinces with a high repartimiento including an indicator for whether the province had a quota (above the median),an additional year at war rebellion in the year of sale(column 2),suggesting that leads to an increase in the prices of these provinces of their impact might have already been priced-in.6 Re- around 2%.Considering the average war lasts about sults also remain similar but less precise when including five years and the mean price of a Peruvian province in the sample four provinces that today are part of Peru is 5,300 pesos,this represents approximately 500 pesos but used to be part of Bolivia. or two times the yearly wage of a military captain in Parallel Trends.An important identifying assump- the Spanish army.This estimate is consistent with find- tion is that in the absence of war.price trends are par- ings from Panel B column 2,showing how more prof- allel among provinces with high and low repartimiento itable provinces exhibit 16%higher prices during war quotas.To validate this assumption,I employ a strategy times than peace.14 However,because not every year similar to the event study methodology by estimating saw the sale of provinces both above and below the me- the following: dian of the repartimiento quota,s Panel C instead uses Log(Priceiit)=aij+y 14 An alternative interpretation is that estimates are driven by low repartimiento provinces dropping prices during war.Yet,regressing B*I*HighRepartoij +xii+wit+eijt the difference in prices between war and peace on both groups of te{-4+,-3.-2,0.1.2.3,4+} provinces(excluding the constant)shows that the difference in prices is greater for high repartimiento provinces(B1=2.370 pesos)than (2) for low repartimiento ones (B2 =1,002 pesos)with the F-test of equality in the coefficients significant at the 10%level (p-value 0.08).I thank an anonymous referee for raising this possibility. 1577%of years with sales had a province both below and above the 16 Given buyers had an incentive to"know"well the province they repartimiento median sold. were purchasing,this is the most likely explanation. 977

Office-Selling, Corruption, and Long-Term Development in Peru TABLE 1. Office Prices and Repartimiento (1) (2) (3) DV: Log Prices (pesos) Panel A: Baseline WarLength × HighRepartimiento 0.019∗∗∗ 0.019∗∗∗ 0.016∗∗ (0.005) (0.005) (0.013) [0.026] [0.026] [0.036] R-squared 0.833 0.833 0.828 Panel B: War Indicator War × HighRepartimiento 0.163∗∗ 0.164∗∗ 0.140∗ (0.036) (0.036) (0.066) [0.12] [0.11] [0.11] R-squared 0.831 0.831 0.827 Panel C: Continuous Repartimiento Measure WarLength × Repartimiento 0.014∗∗ 0.014∗∗ 0.011∗ (0.029) (0.029) (0.076) [0.00] [0.00] [0.00] R-squared 0.831 0.831 0.827 Mean DV 8.216 8.216 8.238 Observations 463 463 502 Provinces 44 44 48 Rebellion indicator No Yes Yes Provinces Bolivia No No Yes p-values in parentheses. Cluster-robust wild-bootstrap p-values in brackets. All specifications include province FE, year FE, and time-trends for individual bishop regions. Bolivia provinces are four provinces ruled by the Audiencia of Charcas at the time (not Lima) but currently part of Peru. ∗∗∗ p < 0.01, ∗∗ p < 0.05, ∗ p < 0.1 when the Crown is less selective (during war). In terms of magnitude, the coefficient of 0.019 in column 1,Panel A, suggests that for provinces with a high repartimiento quota (above the median), an additional year at war leads to an increase in the prices of these provinces of around 2%. Considering the average war lasts about five years and the mean price of a Peruvian province is 5,300 pesos, this represents approximately 500 pesos or two times the yearly wage of a military captain in the Spanish army. This estimate is consistent with find￾ings from Panel B column 2, showing how more prof￾itable provinces exhibit 16% higher prices during war times than peace.14 However, because not every year saw the sale of provinces both above and below the me￾dian of the repartimiento quota,15 Panel C instead uses 14 An alternative interpretation is that estimates are driven by low repartimiento provinces dropping prices during war. Yet, regressing the difference in prices between war and peace on both groups of provinces (excluding the constant) shows that the difference in prices is greater for high repartimiento provinces (B1 = 2,370 pesos) than for low repartimiento ones (B2 = 1,002 pesos) with the F-test of equality in the coefficients significant at the 10% level (p-value = 0.08). I thank an anonymous referee for raising this possibility. 15 77% of years with sales had a province both below and above the repartimiento median sold. the continuous measure of repartimiento with similar results. In general, estimates do not change much when including an indicator for whether the province had a rebellion in the year of sale (column 2), suggesting that their impact might have already been priced-in.16 Re￾sults also remain similar but less precise when including in the sample four provinces that today are part of Peru but used to be part of Bolivia. Parallel Trends. An important identifying assump￾tion is that in the absence of war, price trends are par￾allel among provinces with high and low repartimiento quotas. To validate this assumption, I employ a strategy similar to the event study methodology by estimating the following: Log(Pricei jt) = αi j + γt + τ∈{−4+,−3,−2,0,1,2,3,4+} βτ ∗ Iτ ∗ HighRepartoi j + xi jt + wjt + i jt (2) 16 Given buyers had an incentive to “know” well the province they were purchasing, this is the most likely explanation. 977 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S000305541800045X

Jenny Guardado FIGURE 3. Coefficients from Table 2 ears before ears before befor into nto ears ear 95%Cl ●Coefficient where I is a set of seven dummy variables equal to 1 if sion of time-varying measures of revenue collection at t years had passed since the start of war(-4+<t <4 the caja level17 change little the baseline estimates.The +)where-4+refers to more than 4 years before a war latter reduces concerns that higher prices are mostly and 4+refers to more than 4 years into the war.The driven by reported fiscal revenue. year immediately before a war is left as the comparison Robustness.Other robustness checks allow me to as- group and assigned zero in Figure 3 for visualization sess the sensitivity of the baseline results.First,in Table purposes.If the coefficient of the periods prior to a war A.3 of the Appendix,I provide a nonparametric way (B-4+,B-3 and B-2)are not significantly different from of evaluating the relationship of interest by splitting 21105.501090 zero,the parallel trends assumption is likely to hold. the continuous measure of repartimiento quotas into Results presented in Figure 3 and Table 2 show that quartiles and interacting them with the length of Eu- prices in provinces with high repartimiento versus oth- ropean wars.As noted,coefficients become larger and ers did not significantly differ in the years immediately more precise the higher the value of the conditioning before a war,but that the divergence actually took variable,consistent with the findings from the linear place during war times as can be seen in the increase models. in the size of the coefficient in the first year of war and Second,in Table A.4 I limit the sample to only those remaining positive in subsequent years.It is only after conflicts in which Spain was theoretically less suscepti- more than four years at war that the difference exhibits ble to manipulate the onset and length of wars.Specif- greater statistical precision. ically,"succession"wars,where the timing is driven by Time-Varying Confounders.In addition to checking the sudden death of a monarch.18 Results show that the for pretreatment trends,it is important to rule out other findings are not driven by potentially endogenous entry factors unrelated to extraction that would be driving into wars. the increase in office prices during wars in Europe. Given the main effect is an interaction term,it is To do so,I interact traits such as the distance of the susceptible to potential outliers.Therefore,I estimate province to the capital (Lima),the elevation of the the preferred specification(column 2 of Table 1)while province,and an indicator for the presence of a bishop leaving out two provinces at the time (out of 44)to seat with the length of war to examine the stability of assess the sensitivity of the results to changes in the the baseline coefficients.Table 3 shows that the com- bined effect of repartimiento quotas and wartime in Europe is still the main determinant of the increase in 17 Peru was fiscally organized in 13 cajas or revenue-collection office prices rather than reflecting"better"provinces hese are the War of the Spanish Succession (1704-1714)and in terms of location,elevation,distance to capital,or a War of the Polish(1733-1738)and Austrian Succession (1740-1748), bishop seat.Furthermore,Panel B shows that the inclu- which overlaps with Jenkins'Ear War(1738-1739). 978

Jenny Guardado FIGURE 3. Coefficients from Table 2 -.5 0 .5 Change in Log(Office Prices) 4+ years before 3 years before 2 years before 1 year before 1 year into 2 years into 3 years into 4+ years into 95 % CI Coefficient where Iτ is a set of seven dummy variables equal to 1 if τ years had passed since the start of war (−4 + ≤τ ≤ 4 +), where −4+ refers to more than 4 years before a war and 4+ refers to more than 4 years into the war. The year immediately before a war is left as the comparison group and assigned zero in Figure 3 for visualization purposes. If the coefficient of the periods prior to a war (β−4 +,β−3 and β−2 ) are not significantly different from zero, the parallel trends assumption is likely to hold. Results presented in Figure 3 and Table 2 show that prices in provinces with high repartimiento versus oth￾ers did not significantly differ in the years immediately before a war, but that the divergence actually took place during war times as can be seen in the increase in the size of the coefficient in the first year of war and remaining positive in subsequent years. It is only after more than four years at war that the difference exhibits greater statistical precision. Time-Varying Confounders. In addition to checking for pretreatment trends,it is important to rule out other factors unrelated to extraction that would be driving the increase in office prices during wars in Europe. To do so, I interact traits such as the distance of the province to the capital (Lima), the elevation of the province, and an indicator for the presence of a bishop seat with the length of war to examine the stability of the baseline coefficients. Table 3 shows that the com￾bined effect of repartimiento quotas and wartime in Europe is still the main determinant of the increase in office prices rather than reflecting “better” provinces in terms of location, elevation, distance to capital, or a bishop seat. Furthermore, Panel B shows that the inclu￾sion of time-varying measures of revenue collection at the caja level17 change little the baseline estimates. The latter reduces concerns that higher prices are mostly driven by reported fiscal revenue. Robustness.Other robustness checks allow me to as￾sess the sensitivity of the baseline results. First, in Table A.3 of the Appendix, I provide a nonparametric way of evaluating the relationship of interest by splitting the continuous measure of repartimiento quotas into quartiles and interacting them with the length of Eu￾ropean wars. As noted, coefficients become larger and more precise the higher the value of the conditioning variable, consistent with the findings from the linear models. Second, in Table A.4 I limit the sample to only those conflicts in which Spain was theoretically less suscepti￾ble to manipulate the onset and length of wars. Specif￾ically, “succession” wars, where the timing is driven by the sudden death of a monarch.18 Results show that the findings are not driven by potentially endogenous entry into wars. Given the main effect is an interaction term, it is susceptible to potential outliers. Therefore, I estimate the preferred specification (column 2 of Table 1) while leaving out two provinces at the time (out of 44) to assess the sensitivity of the results to changes in the 17 Peru was fiscally organized in 13 cajas or revenue-collection regions. 18 These are the War of the Spanish Succession (1704–1714) and the War of the Polish (1733–1738) and Austrian Succession (1740–1748), which overlaps with Jenkins’ Ear War (1738–1739). 978 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S000305541800045X

Office-Selling,Corruption,and Long-Term Development in Peru TABLE 2.War and Office-Prices (1) (2) (3) DV:Log Prices(Pesos) Panel A 4+years before war x HighReparto 0.145 0.150 0.102 (0.393) (0.379) (0.545) 「0.4821 0.4481 0.5941 3 years before war x HighReparto 0.003 0.003 0.048 (0.987 (0.988) (0.785) f0.948 0.951 「0.831 2 years before war x HighReparto -0.002 -0.019 0.135 (0.992) (0.936) (0.522) f1.001 0.9641 0.5161 1 year after war x HighReparto 0.132 0.132 0.130 (0.415) (0.414) (0.426) f0.5721 [0.5681 「0.4921 2 years after war x HighReparto 0.162 0.163 0.151 (0.281) (0.280) (0.319) [0.4181 [0.4181 「0.4241 3 years after war x HighReparto 0.071 0.071 0.062 (0.722) (0.723) (0.759) [0.79 [0.79] [0.8181 4+years after war x HighReparto 0.228* 0.228** 0.220* (0.048) (0.049) (0.057) [0.26] [0.262] [0.234 Mean DV 8.216 8.216 8.238 Observations 463 463 502 R-squared 0.832 0.832 0.828 Provinces 44 44 48 Rebellion indicator No Yes Yes Provinces Bolivia No No Yes p-values in parentheses.Cluster-robust wild-bootstrap p-values in brackets. All specifications include province FE,year FE,and time-trends for individual e2sanepoetarcm88ogeamop0baHpe60ereg 0.05,*p<0.1 sample.As shown in Figure A.5 of the Appendix,the bility (Duke,Marquis,Count,etc.),to a nobility order t-statistic is always well-above conventional levels of (Knight of the Santiago or Calatrava order),or have statistical significance and coefficients remain similar pursued a career in the army(captain,sergeant,among to the baseline.An additional exercise in Table A.5 others). shows that the result is robust to including flexible As discussed more extensively above,in eighteenth province-specific trends(as opposed to regional ones) century Spain social status was a sign (if imperfect)of to account for potential omitted variables. economic status,social capital and connections to the In sum,results show that buyers paid more for more royal court in Madrid,as well as of lineage and a fam- profitable positions during war times relative to peace, ily reputation.19 In fact,the laws governing the Indies the key question is then:Why? established that individuals of high-social status were the best suited to serve as corregidores in the colonies (Lohmann Villena 1957,100).In line with this,Panel A Mechanism:Negative Selection of Colonial of Table A.6 shows that the Crown preferred to appoint Officials? those with military careers or nobility titles,whereas those lacking social status were more likely to access Does the increase in office prices reflect a change in office via purchase.Such a preference is optimal in a the type of officials in provinces with greater oppor- context of poor information and monitoring since it tunities for extraction versus others?Although mea- suring "quality"in this context is no easy task,I pro- vide evidence based on one dimension:the social status 19It was quite common for individuals to be rewarded by the Crown for services or military accomplishments done by relatives(e.g.,par- of purchasers.That is,whether they belong to the no- ents,uncles,grandparents). 979

Office-Selling, Corruption, and Long-Term Development in Peru TABLE 2. War and Office-Prices (1) (2) (3) DV: Log Prices (Pesos) Panel A 4+ years before war × HighReparto 0.145 0.150 0.102 (0.393) (0.379) (0.545) [0.482] [0.448] [0.594] 3 years before war × HighReparto 0.003 0.003 0.048 (0.987) (0.988) (0.785) [0.948] [0.95] [0.83] 2 years before war × HighReparto –0.002 –0.019 0.135 (0.992) (0.936) (0.522) [1.00] [0.964] [0.516] 1 year after war × HighReparto 0.132 0.132 0.130 (0.415) (0.414) (0.426) [0.572] [0.568] [0.492] 2 years after war × HighReparto 0.162 0.163 0.151 (0.281) (0.280) (0.319) [0.418] [0.418] [0.424] 3 years after war × HighReparto 0.071 0.071 0.062 (0.722) (0.723) (0.759) [0.79] [0.79] [0.818] 4+ years after war × HighReparto 0.228∗∗ 0.228∗∗ 0.220∗ (0.048) (0.049) (0.057) [0.26] [0.262] [0.234] Mean DV 8.216 8.216 8.238 Observations 463 463 502 R-squared 0.832 0.832 0.828 Provinces 44 44 48 Rebellion indicator No Yes Yes Provinces Bolivia No No Yes p-values in parentheses. Cluster-robust wild-bootstrap p-values in brackets. All specifications include province FE, year FE, and time-trends for individual bishop regions. Bolivia provinces are four provinces ruled by the Audiencia of Charcas at the time (not Lima) but currently part of Peru. ∗∗∗ p < 0.01, ∗∗ p < 0.05, ∗ p < 0.1 sample. As shown in Figure A.5 of the Appendix, the t-statistic is always well-above conventional levels of statistical significance and coefficients remain similar to the baseline. An additional exercise in Table A.5 shows that the result is robust to including flexible province-specific trends (as opposed to regional ones) to account for potential omitted variables. In sum, results show that buyers paid more for more profitable positions during war times relative to peace, the key question is then: Why? Mechanism: Negative Selection of Colonial Officials? Does the increase in office prices reflect a change in the type of officials in provinces with greater oppor￾tunities for extraction versus others? Although mea￾suring “quality” in this context is no easy task, I pro￾vide evidence based on one dimension: the social status of purchasers. That is, whether they belong to the no￾bility (Duke, Marquis, Count, etc.), to a nobility order (Knight of the Santiago or Calatrava order), or have pursued a career in the army (captain, sergeant, among others). As discussed more extensively above, in eighteenth century Spain social status was a sign (if imperfect) of economic status, social capital and connections to the royal court in Madrid, as well as of lineage and a fam￾ily reputation.19 In fact, the laws governing the Indies established that individuals of high-social status were the best suited to serve as corregidores in the colonies (Lohmann Villena 1957, 100). In line with this, Panel A of Table A.6 shows that the Crown preferred to appoint those with military careers or nobility titles, whereas those lacking social status were more likely to access office via purchase. Such a preference is optimal in a context of poor information and monitoring since it 19 It was quite common for individuals to be rewarded by the Crown for services or military accomplishments done by relatives (e.g., par￾ents, uncles, grandparents). 979 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S000305541800045X

Jenny Guardado TABLE 3.Office Prices and Repartimiento-Additional Time-Varying Controls (1) (2) (3) DV:Log Prices(Pesos) Panel A:Other Provincial Traits WarLength x HighReparto 0.020** 0.019** 0.019** (0.005) (0.006) (0.007) [0.0181 [0.0221 [0.0381 WarLength x DistanceLima 0.002 0.001 0.001 (0.716) (0.858) (0.823) WarLength x Elevation 0.002 0.002 (0.596) (0.590) WarLength x Bishopry 0.002 (0.868) Mean DV 8.216 8.216 8.216 Observations 463 463 463 R-squared 0.833 0.833 0.833 Provinces 44 44 44 Panel B:Tax Collection WarLength x HighReparto 0.026** 0.026** 0.022** (0.004) (0.005) (0.012) f0.0281 0.0261 [0.0421 TotalTaxRevenue 0.019 0.016 0.009 (0.810) (0.839) (0.904 Mean DV 8.365 8.365 8.388 Observations 294 294 321 R-squared 0.825 0.826 0.827 Provinces 42 42 46 Rebellion indicator No Yes Yes Provinces Bolivia No No Yes p-values in parentheses.Cluster-robust wild-bootstrap p-values in brack- ets.All specifications include province FE,year FE,and time-trends for individual bishop regions.Bolivia provinces are four provinces ruled by the Audiencia of Charcas at the time(not Lima)but currently part of Peru. *p<0.01,*p<0.05,*p<0.1 allows the monarch to "police behavior"by choosing These estimates are broadly consistent with his- individuals with higher reputation costs in the form of torical accounts describing how office-selling allowed social capital (Allen 2005,161).Being found in con- "worse"individuals to enter office (Sanz 2009.43: tempt of the Crown could ostracize members across Lohmann Villena 1957,130;Solorzano and Pereira generations thus reducing social capital and economic cited by Moreno 1977.71)and other work in con- opportunities. temporary settings.20 According to Andean histori- To examine this possibility more formally,Table 4 ex- ans,repartimiento only became widespread by the plores whether provinces with high repartimiento are end of the seventeenth century,precisely when office- significantly less likely to be purchased by those with selling started (O'Phelan 1988.90:Lohmann Villena nobility and military titles during war times compared 1957,130).Moreover,contemporary reports to King to peace.Column 1 shows that an additional year at Ferdinand VI(the"Secret News of the Americas")un- war decreases in about 1.4%the likelihood of a titled equivocally linked office-selling to the extractive be- governor,particularly from the knighted nobility(ca- havior of corregidores regarding repartimiento activi- balleros).Given the average war is 4.7 years,this repre- ties (Ramos Gomez 1985.174-5). sents a 7%reduction.Estimates for those with a mili- tary career(column 3)are small in magnitude,and less precisely estimated likely due to the breadth of the cat- egory.Figure A.6 in the Appendix provides additional 20 Weaver (2018)formally shows that a position's scope for corrup tion influences the quality of public officials when these are allocated graphical evidence of this relationship. via auction. 980

Jenny Guardado TABLE 3. Office Prices and Repartimiento—Additional Time-Varying Controls (1) (2) (3) DV: Log Prices (Pesos) Panel A: Other Provincial Traits WarLength × HighReparto 0.020∗∗∗ 0.019∗∗∗ 0.019∗∗∗ (0.005) (0.006) (0.007) [0.018] [0.022] [0.038] WarLength × DistanceLima 0.002 0.001 0.001 (0.716) (0.858) (0.823) WarLength × Elevation 0.002 0.002 (0.596) (0.590) WarLength × Bishopry 0.002 (0.868) Mean DV 8.216 8.216 8.216 Observations 463 463 463 R-squared 0.833 0.833 0.833 Provinces 44 44 44 Panel B: Tax Collection WarLength × HighReparto 0.026∗∗∗ 0.026∗∗∗ 0.022∗∗ (0.004) (0.005) (0.012) [0.028] [0.026] [0.042] TotalTaxRevenue 0.019 0.016 0.009 (0.810) (0.839) (0.904) Mean DV 8.365 8.365 8.388 Observations 294 294 321 R-squared 0.825 0.826 0.827 Provinces 42 42 46 Rebellion indicator No Yes Yes Provinces Bolivia No No Yes p-values in parentheses. Cluster-robust wild-bootstrap p-values in brack￾ets. All specifications include province FE, year FE, and time-trends for individual bishop regions. Bolivia provinces are four provinces ruled by the Audiencia of Charcas at the time (not Lima) but currently part of Peru. ∗∗∗ p < 0.01, ∗∗ p < 0.05, ∗ p < 0.1 allows the monarch to “police behavior” by choosing individuals with higher reputation costs in the form of social capital (Allen 2005, 161). Being found in con￾tempt of the Crown could ostracize members across generations thus reducing social capital and economic opportunities. To examine this possibility more formally,Table 4 ex￾plores whether provinces with high repartimiento are significantly less likely to be purchased by those with nobility and military titles during war times compared to peace. Column 1 shows that an additional year at war decreases in about 1.4% the likelihood of a titled governor, particularly from the knighted nobility (ca￾balleros). Given the average war is 4.7 years, this repre￾sents a 7% reduction. Estimates for those with a mili￾tary career (column 3) are small in magnitude, and less precisely estimated likely due to the breadth of the cat￾egory. Figure A.6 in the Appendix provides additional graphical evidence of this relationship. These estimates are broadly consistent with his￾torical accounts describing how office-selling allowed “worse” individuals to enter office (Sanz 2009, 43; Lohmann Villena 1957, 130; Solorzano and Pereira cited by Moreno 1977, 71) and other work in con￾temporary settings.20 According to Andean histori￾ans, repartimiento only became widespread by the end of the seventeenth century, precisely when office￾selling started (O’Phelan 1988, 90; Lohmann Villena 1957, 130). Moreover, contemporary reports to King Ferdinand VI (the “Secret News of the Americas”) un￾equivocally linked office-selling to the extractive be￾havior of corregidores regarding repartimiento activi￾ties (Ramos Gomez 1985, 174–5). 20 Weaver (2018) formally shows that a position’s scope for corrup￾tion influences the quality of public officials when these are allocated via auction. 980 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S000305541800045X