Native American Economic
History
U.S. Economic History
Econ 4524
Dustin Frye
Connecting Native American
Economic Development & History
¤  According to the 2000 Census,
¤  For those 25 and older, 33.1% have less than a high school
education, compared to 19.6% nation wide
¤  The poverty rate is 25.7%, compared to 12.4% nation wide
¤  Median earnings of Native Americans are 22% lower than the
national average.
¤  Native American life expectancy is 5 years less than the national
average.
¤  Deaths rates are significantly higher in several areas:
¤  Alcoholism – 514%
¤  Diabetes – 177%
¤  Before we can understand how to fully address these issues,
it’s important to understand why and how these areas
developed like they did.
Features of Native American
Reservations
¤  Tribal Organization & Sovereignty
¤  Legal Differences
¤  Casinos
¤  Different Institutions
¤  Agriculture and Resource Dependence
¤  Typically rural areas
¤  Water rights
¤  Mining, Fishing
¤  Agriculture
Land Allotment Timing During the
Dawes Act
General Allotment Act of 1887
¤  Divided reservation land into parcels and assigned each
tribal member a lot
¤  Initially a 25 year trust before receiving title
¤  Excess land made available for public purchase
¤  Proceeds placed in a government trust
¤  Executive branch designated reservations open for
allotment
¤  Indian Reorganization Act of 1934 ends the Allotment Era
¤  Trust land frozen
Dawes Timing
¤  Allotment timing was instrumental in forming the property
rights structure on reservations today
¤  Early allotment dates led to more land leaving trust status
¤  Later allotment dates resulted in more remaining in trust
status
¤  Results in a mosaic of land tenures on reservations
¤  Fee-Simple, Individual Trust, Tribal Trust & Federal Trust
Dawes Today
¤  This land tenure structure is still found on reservations
today
¤  Anderson & Lueck (1992)
¤  Land tenure types have different agricultural productivities
¤  Individual Trust is 30-40% less productive than Fee-Simple
¤  Tribal Trust is 85-90% less productive than Fee-Simple
Data and Empirics
¤  County Level Census Data 1880, 1890, 1900 & 1910
¤  Allotment and Baseline Reservation Information from the
Bureau of Indian Affairs
¤  Hazard Model with local farming, demographic and
reservation characteristics and regional farming and
demographic characteristics
¤ Which characteristics are associated with
motivating allotment timing?
Reservation Locations
Hazard Models
¤  I estimate Hazard Models to exploit variation in the timing of
allotment
¤  Analysis of the length of time until “failure”
¤  The hazard rate at a particular time is the rate at which a
duration of a particular event ends, conditional on having
lasted until that time.
¤  The parameters indicate whether or not the characteristics of
interest affected the “risk” or timing of allotment.
Survival Functions
0
.25
.5
.75
1
Kaplan-Meier survival estimate
0
10
20
30
analysis time
95% CI
40
Survivor function
50
Survival Functions
0.00
0.25
0.50
0.75
1.00
Kaplan-Meier survival estimates
0
10
20
30
40
50
analysis time
areaoffice = Aberdeen
areaoffice = Billings
areaoffice = Sacramento
areaoffice = Portland
areaoffice = Misc. Eastern
areaoffice = Andarko & Muskogee
areaoffice = Minneapolis
areaoffice = Gallup
areaoffice = Phoenix
Preliminary Results
Demographic,and,Agricultural,Factors,that,Influence,Allotment,Timing
Exponential
(2)
(3)
90.797***
(0.165)
Share0of0Whites
92.049***
(0.668)
Share0of0Improved0Acreage
90.490**
(0.206)
Acres0of0Farmland0per0Sq0Mi
0.987***
(0.173)
Original0Reservation0Size
0.228***
0.339***
(0.0623)
(0.0768)
Farm0Value0per0Acre
1.733***
(0.301)
Year0Reservation0Established 90.00603*** 90.0111***
(0.000421) (0.00106)
Neighboring0County
Population0Density
0.893***
(0.141)
Share0of0Whites
3.265*
(1.962)
Share0of0Improved0Acreage
2.325***
(0.319)
Acres0of0Farmland0per0Sq0Mi
90.850***
(0.109)
Farm0Value0per0Acre
91.490***
(0.170)
Observations
450
450
491
Reservation0County
Population0Density
(1)
0.216***
(0.0683)
92.373**
(0.972)
(4)
90.861***
(0.198)
93.130***
(0.729)
0.214
(0.346)
1.425***
(0.293)
0.399***
(0.0855)
1.423***
(0.547)
90.0114***
(0.00114)
90.0272
(0.309)
9.689**
(4.104)
91.190***
(0.456)
90.568
(0.348)
0.466
(0.573)
450
Positive and Negative
coefficients indicate
whether it increases or
decreases the hazard
of allotment or the
“likelihood” of
allotment
Preliminary Results
Demographic,and,Agricultural,Factors,that,Influence,Allotment,Timing
Exponential
(2)
(3)
90.797***
(0.165)
Share0of0Whites
92.049***
(0.668)
Share0of0Improved0Acreage
90.490**
(0.206)
Acres0of0Farmland0per0Sq0Mi
0.987***
(0.173)
Original0Reservation0Size
0.228***
0.339***
(0.0623)
(0.0768)
Farm0Value0per0Acre
1.733***
(0.301)
Year0Reservation0Established 90.00603*** 90.0111***
(0.000421) (0.00106)
Neighboring0County
Population0Density
0.893***
(0.141)
Share0of0Whites
3.265*
(1.962)
Share0of0Improved0Acreage
2.325***
(0.319)
Acres0of0Farmland0per0Sq0Mi
90.850***
(0.109)
Farm0Value0per0Acre
91.490***
(0.170)
Observations
450
450
491
Reservation0County
Population0Density
(1)
0.216***
(0.0683)
92.373**
(0.972)
(4)
90.861***
(0.198)
93.130***
(0.729)
0.214
(0.346)
1.425***
(0.293)
0.399***
(0.0855)
1.423***
(0.547)
90.0114***
(0.00114)
90.0272
(0.309)
9.689**
(4.104)
91.190***
(0.456)
90.568
(0.348)
0.466
(0.573)
450
Positive and Negative
coefficients indicate
whether it increases or
decreases the hazard
of allotment or the
“likelihood” of
allotment
Result Summary
¤  Agricultural variables, like farm value per acre and the share
of farm land in a county seem to favor earlier allotment
timing.
¤  Some of the demographic variables suggest that political
organization was important.
¤  Initial reservation characteristics suggests larger reservations
and younger reservations led to earlier allotment dates.
Leasing, Law and Land Tenure:
Understanding the Impact of the LongTerm Leasing Act of 1955
Review of Native American Land Tenure
¤  Reservation land is divided into four-types
¤  Fee-Simple
¤  Individual Trust
¤  Tribal Trust
¤  Federal Trust
Paper Overview
¤  Use a new reservation level panel dataset
¤  Examine national and regional trends in land tenure
¤  Explore how the Indian Long-Term Leasing Act (LTLA) of
1955 changed the flow of land between tenure types
¤  Significant changes to the growth rates of individual trust
land and fee-simple land
¤  Test for differential impacts of the LTLA by allotment dates
¤  Suggests that heirship may be a major mechanism through
which the LTLA is impacting land holding behavior
Reservation Map
0
.1
.2
.3
.4
.5
Shares of Native American Land Tenures
1939 to 1978
1940
1950
1960
Year
1970
Share of Indiv. Trust
Share of Tribal Trust
Share of Federal Trust
Share of Fee-Simple
Verticle line represents the passage of the Long-Term Leasing Act in 1955.
Sources: See Data Appendix
1980
Heirship
¤  With each subsequent generation the fraction of
ownership for any single individual falls exponentially.
¤  Particularly problematic for individual trust land
¤  Organization costs
¤  Leasing individual trust land has higher future costs
¤  As a result, marginal owners choose to sell now
Indian Long-Term Leasing Act of 1955
¤  All new leases and renewals on individual or tribal trust land
require BIA approval
¤  Before LTLA – Administrative costs, Heirship Issues
¤  Expanded maximum lease length for individual and tribal
trust from 5 years to 25 years
¤  Now organizational costs related to heirship are distributed
over a longer time horizon
¤  In the short-run, the discounted present value of leasing
individual trust land increases
¤  Expect slower flow of land from individual trust to fee-simple
Empirical Specification
Seemingly Unrelated Regression
¤  TenurePctChange
¤  Avg. Percentage change from period t-i to t for a given tenure type
¤  LTLA=1 if year>1957
¤  Predictions:
¤  Tribal Trust land becomes more desirable after LTLA: β3 >0
¤  Reduction in flow of land to fee-simple: β3 <0
¤  Interested in the marginal effect of LTLA
¤  β2 +(β3 x Year)
-2
-1
Marginal Effects
0
1
2
3
Marginal Effects of LTLA on Individual Trust Pct Change
-20
-10
0
Years After LTLA
Marginal Effect
Lower Bound
10
Upper Bound
20
-4
Marginal Effects
-2
0
2
4
Marginal Effects of LTLA on Fee Simple Pct Change
-20
-10
0
Years After LTLA
Marginal Effect
Lower Bound
10
Upper Bound
20
Incorporating Heirship
¤  Allotment Date Groups
¤  Unallotted vs. Early Allotment vs. Late Allotment
¤  Hypothesis: Land with more heirs, experiences more
benefit following the LTLA
¤  Early allotment dates proxies for more heirs
-1
Marginal Effects
0
1
2
3
Marginal Effects of LTLA on Pct Change
in Individual Trust by Allotment Date
-20
-10
0
Years After LTLA
Unallotted
Allotted After 1910
10
Allotted Before 1910
20
-4
Marginal Effects
-2
0
2
4
Marginal Effects of LTLA on Pct Change
in Fee-Simple by Allotment Date
-20
-10
0
Years After LTLA
Unallotted
Allotted After 1910
10
Allotted Before 1910
20
Paper Review
¤  Use a new reservation level panel dataset
¤  Examine national and regional trends in land tenure
¤  Explore how the Indian Long-Term Leasing Act (LTLA) of
1955 changed the flow of land between tenure types
¤  Significant changes to the growth rates of individual trust
land and fee-simple land
¤  Test for differential impacts of the LTLA by allotment dates
¤  Suggests that heirship may be a major mechanism through
which the LTLA is impacting land holding behavior
¤  Suggests policies aimed at decreasing transaction costs
associated with Native American land tenure offer an
alternative means of promoting economic development
without sacrificing tribal sovereignty.