RHI Webinar: Corvée Labor and State Expansion in Colonial Indonesia

What explains the replacement of taxation in labor with taxation in money? Specifically, what is the role of state capacity in this process? By constructing a new province-level database for colonial Java this study shows that local state expansion increased the use of corvée labor. I proxy for state expansion with the number of state officials and employ a panel data framework covering eighteen Javanese provinces over thirty-two years (1874-1905) that controls for population growth, industrialization, agricultural expansion, and wage growth in addition to province and year fixed effects. To address endogeneity, I instrument for the number of state officials with effective distance to the capital. A one percent increase in state officials increases corvée labor use by more than one percent. However, national-level policy intending to centralize state finances gradually replaced the labor duties with a poll tax. Local officials thus only slowed the movement away from labor duties. Opposing interests of different state actors, particularly national-level and local-level actors, are therefore key in understanding this facet of fiscal modernization.