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Class activity

Market for governorships

Today, we’re looking at what happened when the Spanish Crown switched from appointing governorships in colonial Peru to selling them to the highest bidder. The motive for switching to sales was the Spanish Crown’s financial troubles due to foreign wars.

In groups of 2-3, find out the following:

  1. Look up the following colonial institutions in Peru: repartimiento, mita, and tributo; what were they, and how did they differ from one another?
  2. Use the following data on the sale of governorships in colonial Peru; what factors made a governorship more valuable? What one factor seems to be the most valuable?
Variable dictionary
original labels
audiencia Spanish Audiencia
provincia colonial province name
year year of sale
name_approx name of purchaser (approximate)
military military career (or rank)? 1=yes
noble holds either a knight or other nobility titles? 1=yes
rprice1 real office prices (in pesos) 1 peso=272 maravedies
lrprice1 log real office prices (in pesos)
suitindex avg agricultural suitability in province (1=max suitability)
lz log avg elevation
distlima avg distance to Lima (based on center of districts in province)
mita province to provice forced labor to mines? 1=yes
mine gold or silver mine in province? 1=yes
reparto2 assigned repartimiento quota (in pesos) in 1754
lreparto2 log assigned repartimiento quota (in pesos) in 1754

Office-selling and long-run growth

  1. Now, using this data on governorship prices and contemporary development in Peru, look at the relationship between sales prices and current economic outcomes. What does the relationship look like? Do districts that fetched higher prices tend to be better off or worse off today?
  2. What does this all suggest about the effect that selling governorships had on the quality of governance?
Variable dictionary
original labels
provincia colonial province name
district contemporary district name
meanpriceh avg log office price per capita during peace
meanprice avg log office price per capita during war
toilethouse share district households with indoor toilets
schoolyears highest educational level attained (0-21 years)
lhhequiv log of equivalent household consumption minus transfers in normal prices