State-Building through Public Land Disposal? An Application of Matrix Completion for Counterfactual Prediction

03/19/2019
by   Jason Poulos, et al.
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How would the frontier have evolved in the absence of homestead policies? I apply a matrix completion method to predict the counterfactual time-series of frontier state capacity had there been no homesteading. In placebo tests, the matrix completion method outperforms synthetic controls and other regression-based estimators in terms of minimizing prediction error. Causal estimates signify that homestead policies had significant and long-lasting negative impacts on state government expenditure and revenue. These results are similar to difference-in-difference estimates that exploit variation in the timing and intensity of homestead entries aggregated from 1.46 million individual land patent records.

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