Economics of Indigenous Peoples and Institutions

Economics of Indigenous Peoples and Institutions

An NBER conference on Economics of Indigenous Peoples and Institutions took place November 8 in Cambridge. Research Associate Randall Akee of University of California, Los Angeles, and Faculty Research Fellow Emilia Simeonova of Johns Hopkins University organized the meeting. These researchers' papers were presented and discussed:

Valentina Dimitrova-Grajzl, Virginia Military Institute; Peter Grajzl and Joseph Guse, Washington and Lee University; and Michou Kokodoko and Richard Todd, Federal Reserve Bank of Minneapolis

CDFIs and Credit in Indian Country

Many native communities do not have easy access to financial institutions such as banks and credit unions. To fill this gap, a significant number of Community Development Financial Institutions (CDFIs) have opened on or near reservations in recent years. In addition to loans, CDFIs offer financial education to individuals and businesses in native communities. Drawing on a large-scale dataset consisting of individual-level credit bureau records and data from the CDFI Fund, Dimitrova-Grajzl, Grajzl, Guse, Kokodoko, and Todd explore how the presence of CDFIs affects credit risk scores, default rates and thin files of individuals on and near American Indian reservations.

Laurel Wheeler, Duke University

Property Rights, Place-Based Policies, and Economic Development

Wheeler examines the effect of property rights on economic development within local labor markets, including how property rights change the equilibrium response to place-based policies. It does so in the context of federally recognized American Indian reservations, where a fraction of the land is held in trust by the U.S. federal government and associated with restrictions on transactions. Wheeler finds that incomplete property rights on reservations are responsible for lower wages and earnings and higher rates of unemployment. The direction of these findings is robust to an instrumental variables approach to dealing with the endogeneity of property rights. Next Wheeler sheds light on how property rights play a role in determining the incidence of local labor demand shocks induced by casino openings. Particularly in rural areas, when a casino opens on a reservation, the income gap due to incomplete property rights disappears. The estimates suggest frictions in the housing market may be driving this result. This paper provides insights into how place-based policies and property rights jointly shape economic outcomes through changes in the labor market, the housing market, and the mobility of workers.

Thaddieus Conner and Christian Martinez, New Mexico State University, and Aimee Franklin, University of Oklahoma

A Distal Theory of Policy Design: How State Regulatory Environments Condition the Impact of Indian Gaming

Scholars have explored the importance of learning within policy and governance regimes that helps explain change over time. Triple-loop learning argues that this occurs at three distinct stages beginning with minor procedural changes to existing protocol, followed by more substantive changes to underlying assumptions and values among actors, and ending with complete transformation and rethinking of the regime. The following investigation explores how such shifts condition the intended impact of policy regimes through the lens of what the researchers refer to as a "distal theory" of policy design. Conner, Franklin, and Martinez test this theory by examining how restrictions in state gaming compacts condition the intended impact of the 1988 Indian Gaming Regulatory Act (IGRA) on sovereign Native American nations. The IGRA provides the legal framework for Indian gaming with the stated intention of promoting Tribal self-determination and self-sufficiency. However, under the IGRA Tribal governments must sign gaming compacts with states that can include several provisions ranging from revenue sharing to specific market restrictions. As a result, the regulatory environment surrounding Indian gaming differs from state-to-state with some compacts imposing relatively few restrictions while others restrict Tribal operations considerably. The researchers explore how different sub-national regulatory environments surrounding the treatment of revenue sharing and market restrictions differentially influence the impact of gaming on Tribal income levels and employment from 1990 to 2010.

Donna Feir and Rob Gillezeau, University of Victoria; and Maggie Jones, Queen's University

The Slaughter of the Bison and Reversal of Fortunes on the Great Plains

In the late-19th century, the North American bison was slaughtered in a dramatic near-extinction episode that occurred in a period of just over ten years. Feir, Gillezeau, and Jones argue that the rapid rate of this slaughter led to a "reversal of fortunes" for the Native American societies that relied on the bison. The researchers exploit regional variation in the speed at which the bison were slaughtered and tribal variation in bison-dependence to show that bison-dependent Native American tribes suffered a significant change in living standards immediately after the bison's near-extinction, as measured by changes in height. Once the tallest people in the world, the generations of bison-dependent people born after the slaughter were amongst the shortest. The research shows that these effects persist into the present: formerly bison-dependent societies have between 20-40% less income per capita in 2000 than the average Native American nation, and this effect is strongest among the least historically diverse economies. The results are robust to the inclusion of cultural, colonial, contemporary, and geographic factors and hold in both Canada and the United States. Although the living conditions of historically bison-dependent nations improved modestly between 1910 and 2010, as measured by standardized occupational rank, outcomes remain lower than non-bison-dependent nations, particularly for those living on Native American reservations. The researchers suggest that the restrictions on mobility and economic diversification that were placed on Native Americans by federal Indian policy during the 19th and 20th centuries likely hampered the ability of these economies to adjust in the long-run.

Victoria Fan, Timothy Halliday, Megan Inada, and Tetine Sentell, University of Hawaii at Manoa; Randall Akee; and Jill Miyamura, Hawaii Health Information Corporation

The Impact of Public Health Insurance on Medical Utilization in a Vulnerable Population: Evidence from COFA Migrants

In March of 2015, the State of Hawaii stopped covering migrants from countries in the Compact of Free Association (COFA) in its Medicaid program forcing them to obtain private insurance in exchanges. Using administrative data, Fan, Halliday, Inada, Akee, Miyamura, and Sentell show that Medicaid-funded hospitalizations and emergency room admissions declined in this population by 37 and 32%, respectively, after the expiration of Medicaid eligibility. Privately funded utilization did increase but not enough to offset declines in publicly-funded utilization resulting in a net decline. An exception to this is that infants born to COFA migrants were substantially more likely to be hospitalized after Medicaid benefits expired.

Deborah A. Cobb-Clark, Nathan Kettlewell, and Stefanie Schurer, University of Sydney, and Sven Silburn, Menzies School of Health Research

The Effect of Quarantining Welfare on School Attendance in Indigenous Communities

Cobb-Clark, Kettlewell, Schurer, and Silburn analyze the impact of a recent initiative by the Australian Government to reduce disadvantage and improve children's welfare in Aboriginal communities. The policy -- known as income management -- quarantines 50 percent of welfare payments to be spent on priority goods (e.g., food, housing, education) and not on socially harmful goods (drugs, pornography, gambling). The researchers' focus is on children's school attendance, which is a precise, high-frequency measure of community functionality and a key policy objective. They identify the causal impact of income management on attendance rates by exploiting exogenous variation in its staggered rollout across communities. The researchers find no evidence that income management increased attendance. Rather, the introduction of income management reduced attendance by 2.7 percentage points (4 percent) on average in the first five months after which attendance eventually returned to its initial level. The attendance penalty is similar for boys and girls, but is larger for secondary school students and students with a tendency to attend school regularly. Exploring the potential mechanisms, the researchers show that income management did not significantly affect student enrollments or mobility patterns into and out of Aboriginal communities. Nor are the results explained by confoundedness with other policy initiatives. Instead, the researchers find that the attendance penalty associated with the introduction of income management is virtually zero after the adoption of more flexible administrative arrangements suggesting that implementation issues may be responsible for the observed temporary reduction in school attendance.

Jeffrey D. Burnette and David Wick, Rochester Institute of Technology, and Jason Younker, University of Oregon

Statistical Termination or Fewer Self-Identified Students: What Is Causing the Decline in American Indian and Alaska Native College Enrollments?

The total number and percentage of American Indian and Alaska Native (AIAN) college students reported by the Integrated Postsecondary Education Data System (IPEDS) has declined every year since 2010. At present, there are 29% fewer undergraduates and 23% fewer graduate students than there were in 2009. At the same time, the U.S. Department of Education mandated that all institutions in higher education change the way they collect and tabulate data for IPEDS. Burnette, Younker, and Wick use data from the American Community Survey to serve as a counterfactual for IPEDS data and investigate if the decline in enrollments is due to fewer AIAN students attending college or a change in how their information is tabulated. They find that the change in methodology used to collect and report racial and ethnic data has led to the underreporting of AIAN college students overall as well as their percentage of the student body. The researchers estimate the current undercount of undergraduate and graduate AIAN students to be approximately 30% of their 2016 IPEDS reported total.