Edoardo Teso (Northwestern University)

join with Nicola Mastrorocco

We study how the organization of the state evolves over the process of development, using a new dataset on the internal organization of the U.S. federal bureaucracy over the 19th century. We digitize archival employment records for the 1817-1905 period, which allow us to observe the identity of 300,000 bureaucrats, together with their occupation, location of employment, and position in the bureaucratic hierarchy. We first establish three sets of stylized facts on the growth and organization of the U.S. state. First, there was a slow growth in state capacity until the early 1860s, with a rapid growth thereafter, driven mainly by the state reaching more locations. Second, economic growth leads to state presence, but distance from the headquarter (Washington DC) limits state presence. Third, the state organization changes after the 1850s, with a lower reliance on employee turnover and greater delegation of power outside Washington DC. We hypothesize that technological innovations that lower communication and monitoring costs are an important driver of these facts. To test this hypothesis, we exploit the staggered expansion of the railroad and telegraph networks across time and space, which decreased communication and monitoring costs between Washington DC and different locations. We show that locations that become better connected to DC experience an increase in state presence, an increase in delegation of power, and a decrease in employee turnover. The results suggest that high communication and monitoring costs go hand in hand with a small, personalistic state organization based on networks of trust, while technological shocks lowering these costs are conducive to the emergence of modern bureaucratic states. 

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