Fiscal Modernization, Coercion, and Trade: Evidence from Colonial Indonesia
Access Asia Talk Series
Monday, November 30, 2020, 11:30 am -12:30 pm (PST)
Fiscal Modernization, Coercion, and Trade
Evidence from Colonial Indonesia
PhD candidate in Economics, UCI
Fiscal modernization is key for long-run development. What then enables fiscal modernization? This paper studies the impact of trade shocks on the use of labor coercion in taxation, a practice known as corvée labor. To do so, I construct the first database on corvée labor usage and exports covering sixteen Indonesian provinces over forty-one years (1900-1940). I find positive trade shocks reduce corvée usage. Moreover, this effect runs through laborers buying themselves out of their corvée duties. The fall in in-kind taxation is thus mirrored by a rise in monetary taxation. The opposite took place during the trade collapse of the Great Depression. Fiscal modernization, labor coercion, and trade are therefore tightly intertwined.
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