Melissa Dell’s Work on Poverty in Peru

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SEATTLE, Washington — Melissa Dell’s work on the lasting impacts of the mita system on poverty in Peru helped her to earn the 2020 John Bates Clark Medal. The American Economic Association awards this medal annually to an American economist under 40 who makes a meaningful contribution to the field.

Her work over the years has earned her several other top accolades. In 2014, “the International Monetary Fund named her one of the 25 economists under the age of 45.” In 2017, the Barcelona Graduate School of Economics named Dell as “a top economist under the age of 40.” That same year she won an Andrew Carnegie Fellowship. In 2018, The Economist added Dell to its list of the “top eight young economists” in the last 10 years. Dell has said that one of the main questions that has inspired her is understanding the long-term persistence of “poverty and insecurity” as well as “the challenges that society faces in trying to counter them.”

Studies of Lasting Institutional Impacts

A good portion of economic literature examines the lasting impact of institutions and institutional designs on the modern economy using a comparative approach that examines the differing outcomes of separate countries. In their study, economists Sokoloff and Engerman found evidence suggesting the economic institutions put in place in the early colonies of the New World had cemented the inequality injected into the economies by the colonizers. This would later inhibit shared access to economic opportunities.

Similarly,  Acemoglu, Johnson and Robinson found in their study on the development of the New World that poor economic institutions were set up in “relatively rich places” in order to drain the areas of their resources. Accordingly, it was theorized that these areas would become poorer over time due to the critical nature of the institutions. This is precisely what the end result turned out to be

Dell’s Contributions to Economic Literature

Harvard Professor Melissa Dell expanded the field through her work on the effects of the “Spanish-imposed ‘mita’ system” from 1573 to 1812. The mita system was a system of forced labor used by the Spanish to coerce a seventh of the indigenous men in areas across present-day Peru and Bolivia to work in the silver and mercury mines. The one-seventh limit was part of an established rule that limited local labor drafts in Peru. This gave Dell the opportunity to conduct her study comparing districts and their levels of poverty in Peru.

Results From Dell’s Study on Peru

Dell gathered several key results from her study.

  • Over time, the mita system was responsible for lowering household consumption by about 32% in affected districts.

  • It led to long-term impaired growth and development in children that grew up within its boundaries, increasing stunting by 5%.

  • Mita limited large land ownership within its boundaries, having a lasting impact on the rural labor force. By 1845, the rural tributary population in haciendas had dropped 23 percentage points. By 1940, the mita system was still responsible for 14 percent of hacienda labor.

  • Peru regained its independence in 1821, bringing the mita system to an official end. Yet, this only led to instability within the mita districts. Large landowners from non-mita districts moved in to claim “abandoned” territory that was being used by indigenous communities. This resulted in a general instability that continued well into the 20th century.

  • Without the same power of the landowning elite, mita districts were hubs of poverty in Peru. These districts were not able to acquire as many public good provisions, leading to fewer regional roads to connect to population centers.

While her work does not mean that institutions always have a lasting impact on the economy, it has opened the avenue for further research elsewhere. She has worked on the impact of Dutch sugar factories in Indonesia, trade-related worker displacement in Mexico and the impact of divergent institutional practices on the development of northern and southern Vietnam. Overall, the changes brought on by the mita system are still felt today, shedding new light on the causes of poverty in Peru.

– Scott Boyce
Photo: Flickr

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