THESIS
2019
iii leaves, 4, 59 pages : illustrations ; 30 cm
Abstract
Is investing in fiscal capacity always conducive to legal capacity? The answer may be not.
This research paper explores an extractive institution of the salt monopoly and the upheaval
of anti-government secret societies in Qing China (1644-1911). This study finds that
enhancing fiscal capacity by regulating the salt price can generate enemies for the regime
and hamper legal capacity. Using prefecture-level panel data and difference-in-differences
(DID) estimation procedures, I reveal a 30 % increase in secret societies in prefectures with
a higher ratio of counties in which the central government regulated the salt price. By analyzing
581 counties that have government-regulated salt price records within the period
from 1776 to 1911, I find that a 10 % increase in the salt price...[
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Is investing in fiscal capacity always conducive to legal capacity? The answer may be not.
This research paper explores an extractive institution of the salt monopoly and the upheaval
of anti-government secret societies in Qing China (1644-1911). This study finds that
enhancing fiscal capacity by regulating the salt price can generate enemies for the regime
and hamper legal capacity. Using prefecture-level panel data and difference-in-differences
(DID) estimation procedures, I reveal a 30 % increase in secret societies in prefectures with
a higher ratio of counties in which the central government regulated the salt price. By analyzing
581 counties that have government-regulated salt price records within the period
from 1776 to 1911, I find that a 10 % increase in the salt price would raise secret society
cases by 0.2 % for panel analyses , and 6 % for the aggregate cross-sectional regressions.
To address problems of endogeneity, I exploit the interaction term between the distance to
the Lianghuai salt district border and whether the previous year has large-scale wars as an
instrumental variable in order to uncover the causality of the regulated salt price on secret
societies. This paper enriches the literature on state capacity by showing the possible negative
correlation between fiscal capacity and legal capacity.
Keywords: State Capacity; Fiscal Capacity; Legal Capacity; Salt Monopoly; Secret Society
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