Marcos Salgado

How do rulers manage to govern when they cannot implement policy themselves and have limited means to monitor and even communicate with their agents? The personal loyalties of high-ranking officials can help overcome or exacerbate agency problems. The Spanish Empire promoted links between colonial officials and their superiors in Spain and discouraged social ties between them and local elites. I use superiors’ entries and exits as within-official shocks to connections to estimate their effect on promotions and performance. I find that connected ministers were more likely to be promoted and raised more revenue. On the other hand, ministers with more links to local elites collected less revenue. These patterns are explained by personal connections, defined as sustained in-person interactions during their early careers. I also validate the connections measure by showing that they predict endogenous friendships. Link to paper

(with Saumitra Jha and Peter Koudijs)

Can differences in political beliefs, particularly about the benefits of war versus peace, move thick financial markets? To answer this question, we analyze price differences of the actively traded French government Rente in Paris, Bordeaux and Lyon during the Siege of Paris and the subsequent peace negotiations (1870-1871). After Prussia invaded France and laid siege to Paris, information delays limited arbitrage between markets, allowing different local equilibrium prices to emerge. We document that Parisians favored continued resistance, while the rest of France favored an armistice, with these different beliefs evident in a national election widely regarded as a referendum on war versus peace. Following an unlikely victory by French citizen-soldiers, Rente prices, reflecting the costs and benefits of an eventual peace treaty to the French state, diverged substantially in and outside Paris. While France resisted, prices in Paris were higher. However, after the armistice, price differences reversed dramatically, with prices in Paris now substantially lower. Prices only converged after the details of the peace treaty were announced. These patterns match the predictions of a stylized model with different beliefs about how battlefield outcomes affect final peace terms. Consistent with this model, the Rente price responded more strongly to war events in Paris than in the outside markets, reflecting a stronger perceived sensitivity of peace terms to battlefield outcomes. Using detailed data on information transmission and other financial assets and food prices, we show that differences in information sets, liquidity, or discount rates are unlikely to explain these results.  Link to paper 

(with Vitor Calafate and Lucas Carvalho)

We study why subordinates followed their leaders in the Spanish Coup of 1936. We find that the 1936 chain of command was widely broken, but subordinates followed their former leaders. Officers who had served under rebel leaders before 1936 were thirteen percentage points more likely to join the rebellion. Our identification strategy exploits rotation among military leaders to compare officers exposed to rebel leaders to their peers who served in the same destination a few years before or after. We show that our control and treatment samples are balanced in many covariates and that our findings are not driven by selection. We also study the mechanisms behind our results, ruling out indoctrination and finding support for leaders as coordination devices and for expectations of promotions. Link to paper 

(with Guilherme Cota and Andrea Flores)

This paper examines democratic elections as an alternative to political appointments for selecting school principals in Brazil, where 13.7 million public school students attend schools with elected principals. Using panel data (2007-2017), we exploit within-school variation from schools that switch selection methods over time. Schools transitioning from political appointments to elections improve their management practices by 13% of a standard deviation, while schools moving in the opposite direction experience a symmetric deterioration of 17% of a standard deviation. To put this magnitude into context, achieving similar improvements through wage increases would require raising principal salaries by 76%. Event studies reveal no pre-trends and persistent effects, supporting causal interpretation. Electoral selection may work through two mechanisms: selecting better principals and creating incentives for incumbents to improve performance to secure re-election. We find evidence for the selection mechanism-elected principals are 5.9 percentage points more likely to hold postgraduate degrees and have greater experience in education. These findings suggest electoral selection enhances organizational performance by reducing political patronage while incorporating stakeholder knowledge about candidate quality. Link to paper 

(with Edilson Figueiredo and Valentín Figueroa)

Confiscating religious elites has long been a hallmark of state-building across the world. Yet existing research has focused primarily on secular elites, overlooking religious orders' distinct organizational characteristics. We argue that because the monasteries of religious orders are geographically dispersed and maintain translocal ties, their suppression provokes resistance where monasteries continue to exist, not where suppression occurs. Examining the 1536 Dissolution of the Monasteries in England, we show that rebellion was more likely near monasteries spared from suppression, a pattern confirmed using a regression discontinuity design. Because suppression can trigger network-wide backlash, rulers must pursue swift dissolution to preempt coordinated resistance. Using data on monastery closures across 18 European regions (1000-1850), we show that religious suppression unfolds as rapid, comprehensive episodes rather than gradual processes. Recognizing the distinctive characteristics of the modern state's rivals illuminates underexamined dimensions of historical state-building. Link to paper