Working Paper: NBER ID: w31591
Authors: Nicola Mastrorocco; Edoardo Teso
Abstract: We study how the organization of the state evolves over the process of development of a nation, using a new dataset on the internal organization of the U.S. federal bureaucracy over 1817- 1905. First, we show a series of novel facts, describing how the size of the state, its presence across the territory, and its key organizational features evolved over the nineteenth century. Second, exploiting the staggered expansion of the railroad and telegraph networks across space, we show that the ability of politicians to monitor state agents throughout the territory is an important driver of these facts: locations with lower transportation and communication costs with Washington DC have more state presence, are delegated more decision power, and have lower employee turnover. The results suggest that high monitoring costs are associated with small, personalistic state organizations based on networks of trust; technological innovations lowering monitoring costs facilitate the emergence of modern bureaucratic states.
Keywords: state capacity; bureaucracy; monitoring; telegraph; railroad
JEL Codes: D73; M51; N41; P00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| decreased transportation and communication costs (L96) | increased state presence in counties (H79) |
| decreased monitoring costs (G14) | increased delegation of managerial power (M54) |
| increased monitoring capacity (E22) | decreased employee turnover (M51) |
| increased monitoring capacity (E22) | greater stability within the workforce (J29) |
| increased monitoring capacity (E22) | more diverse and stable bureaucratic workforce (J45) |