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

How would states on the American frontier have developed in the absence of homestead policies? This paper explores the role of homestead policies, which opened for settlement hundreds of millions of acres of frontier land, in shaping the size of state governments. Using a matrix completion method, I predict the counterfactual time-series of frontier state size had there been no homesteading. I extend the method to allow for propensity-weighting of the loss function to control for selection bias. Causal estimates signify that homestead policies had significant and long-lasting negative impacts on state government expenditure and revenue. The estimates are in the same direction as those of a continuous difference-in-differences estimator that exploit variation in the timing and intensity of homestead entries, aggregated from 1.46 million individual land patent records.