Essays on Political Economy and Economic Geography

My dissertation consists of three essays. In the first, I systematically document the importance of chance to a fundamental question of economic geography: How did locations develop their specializations in specific manufacturing industries? I show that European immigration to the United States affected the initial location of industries in the late nineteenth century, creating a spatial pattern that remained relatively stable. Immigrants' exposure to specialized manufacturing knowledge and skills depends on their origin. The comparative advantage that came to U.S. counties ``embodied'' in immigrants predicts employment in disaggregated manufacturing industries in subsequent decades. The early establishment of firms in novel industries gave locations first-mover advantage and shaped local manufacturing specialization. Agglomeration forces locked in industries until the present. I address endogeneity issues by exploiting arguably random variation in early immigration enclaves due to the interaction of the aggregate arrivals from European countries, and the movement of the frontier of settlement across U.S. counties.The remaining two chapters consider the importance of individual actors in the realm of politics. My second chapter, co-authored with Max Winkler, studies the incentives for local political leaders when facing an unforeseen threat to their incumbency. The chapter examines the case of the unexpected and short-lived electoral success of the pro-redistribution Populist Party in the 1892 presidential elections. The Populists sought support among poor farmers, regardless of race. This biracial alliance threatened the Democratic establishment in the South, providing it with an incentive to fan racial fears to split the newly formed coalition. Newspapers affiliated with the Democrats spread propaganda of attacks by Blacks on the White community, often involving allegations of sexual assault. Using novel newspaper data, we identify these hate stories and show that they become more prevalent in the years following the 1892 presidential election in counties where the Populists were active. The effect is large and found in newspapers affiliated with the Democrats only. The evidence suggests that the propaganda ``worked'': where newspapers spread more propaganda, the Democrats see more substantial gains in presidential elections in the following decades, long after the Populists left the political arena.The third and last chapter, co-authored with Nico Voigtl�nder, considers the importance of national political leaders for the performance of the states they govern. We create a novel reign-level dataset for European monarchs, covering all major European states from the 10th century until World War I. We first document a strong positive relationship between rulers' intellectual ability and state-level outcomes. To address endogeneity issues, we exploit the facts that i) rulers were appointed according to primogeniture, independent of their ability, and ii) the widespread inbreeding among the ruling dynasties of Europe led to quasi-random variation in ruler ability. We code the degree of blood relationship between the parents of rulers. The `coefficient of inbreeding' is a strong predictor of ruler ability, and the corresponding instrumental variable results imply that ruler ability had a sizeable effect on the performance of states and their borders. This supports the view that `leaders made history,' shaping the European map until its consolidation into nation-states. We also show that rulers mattered only where their power was largely unconstrained. In reigns where parliaments checked the power of monarchs, ruler ability no longer affected their state's performance. Thus, the strengthening of parliaments in Northern European states (where kin marriage of dynasties was particularly widespread) may have shielded them from the detrimental effects of inbreeding