2013 Alesina Michalopoulos Papaioannu Eth Inequality Slides

Ethnic Inequality

Ethnic Inequality

Alberto Alesina, Stelios Michalopoulos and Elias Papaioannou

Harvard University, Brown University, London Business School

February 2013

NBER Economic Growth Meetings (EFG)

Ethnic Inequality

Introduction

Research Question

Observations

I Inequality: sizable differences in economic well-being (income,education, access to public goods) both across and withincountries

I Fractionalization/polarization: differences in ethnic(religious, linguistic) composition both across and withincountries

I Ethnic Inequality (Intersection of Inequality and EthnicFragmentation)

I Market dominant minorities (Chua (2003))

Ethnic Inequality

Introduction

Objective

Idea

Document and analyze empirically the patterns of income in-equality

Specifically :

I study the relationship between ethnic inequality andcomparative economic development across countries

I primary exploration of the origins of ethnic inequality

I assess the role of ethnic inequality on income and publicgoods provision within countries

Ethnic Inequality

Introduction

Findings

Key Finding

Economic Inequality Across Ethnic Groups

=⇒

negative correlate of economic performance

This pattern obtains:

1. Across all countries with both contemporaneous andpredetermined proxies of inequality

2. Across districts within countries (using micro-level data fromSub-Saharan African countries)

3. Across districts within countries within ethnic groups (in Africa)

Ethnic Inequality

Introduction

Ethnic Diversity and Economic Development

Ethnic Diversity - Existing Research

I Theory: Ambiguous effect

I Negative effect: animosity; preferences for publicgoods/redistribution

I Positive effect: heterogeneous inputs => trade, production

I Empirical evidence: clearI Strong negative correlation between ethnic-linguisticfragmentation and measures of development (Easterly and Levine, 1997;Alesina et al. 2003; Alesina, Aghion, and Trebbi, 2004; Desmet et al. 2011; Alesina and La

Ferrara, 2006)

I Less clear-cut association with civil conflict, though overall anegative association (Fearon and Laitin, 2003; Montalvo and Reynal-Querol, 2005,2006)

Ethnic Inequality

Introduction

Income Inequality and Economic Development

Income Inequality - Existing Research

I Theory: Ambiguous effect

I Negative effect: conflict; redistribution; lofty taxationI Positive effect: takeoffs; externalities; specialization inhigh-tech sectors

I Non-monotonic: depending on the level of development (Galor andMoav (2004))

I Empirical evidence: Not clear-cut

I No robust association with growth, democracy, development(Benabou, 1996, 2000)

I Changes in inequality in any direction are associated with lowergrowth (Banerjee and Duflo, 2003)

Ethnic Inequality

Introduction

Income Inequality and Economic Development

Our idea

I A key aspect of ethnic fractionalization is missing

I Inequality across ethnic groups

I A key aspect of income inequality is missing

I Income inequality across ethnic groups

Ethnic Inequality

Introduction

Ethnic Inequality and Economic Development

Channels

I Ethnic Inequality ⇔ Political Inequality =⇒ lower public goodprovision; absence of checks and balances.

I Ethnic Inequality =⇒ Aspiration trap for the less affl uentgroups =⇒ lower effort

I Presence of economically dominant ethnic minorities =⇒negative reaction to free market institutions (work in progress)

I Ethnic Inequality =⇒ Resentment Between Groups (work inprogress)

I Ethnic Inequality =⇒ Conflict Between Groups (work in progress)

Ethnic Inequality

Introduction

Ethnic Inequality and Economic Development

Where?

I Ethnic inequality is pervasive in many countries (e.g., Africa,Asia, elsewhere)

I Examples (Chua, 2003): Kikuyu in Kenya, I(g)bo in Nigeria,Lebanese in Western Africa, Chinese minorities in Eastern Asia

I Racial Inequality in the US (Glen Loury)

I Zoom in on Africa (results are not driven by Africa)

I Most ethnically diverse part of the worldI Salience of ethnicity (Robinson, 2003)

I Detailed regional level on public goods, education, and ethnicidentification (Afrobarometer Surveys)

Ethnic Inequality

Introduction

This Paper

The Road Map1. Construct an index of economic inequality acrossethnic/linguistic groups in all countries

2. Explore association of ethnic inequality with

I Ethnic/linguistic fragmentationI Income inequality

3. Correlation with economic development

4. A primer on the origins of Ethnic Inequality

Heterogeneous geographic ethnic endowments =⇒Inequality in development across ethnic homelands

5. Examine within-country variation using household data fromthe Afrobarometer Surveys.

Ethnic Inequality

Empirics. Data Construction

Data Sources

Ethnic-Linguistic Homelands

I GREG (digitized version of the Atlas Narodov Mira).

I 1,276 ethnic groups around the world.

I The information pertains to the 1960s.

I Ethnologue.

I 7,570 linguistic groups. (though limited coverage for LatinAmerica)

I Early-mid 1990s

Ethnic Inequality


Data Sources

Luminosity

I Satellite images of light density at night (available since 1992)

I Use data in 1992, 2000, 2010

I Strong association with:

I Income growth: Henderson, Storeygaard, and Weil (AER 2012).I Income level: Chen and Nordhaus (PNAS, 2011).I Income level and other proxy measures of well-being. Michalopoulosand Papaioannou (2012, 2013).

I Population estimates at the grid level.

I Gridded Population of the World’dataset (GPW, CIESIN,2005)

I 1990, 2000

Ethnic Inequality


Inequality Indexes

New Inequality MeasuresI Ethnic Inequality (Gini coeffi cient): Inequality in lights percapita across ethnic (linguistic) homelands

I in 1992, 2000, 2009I with GREG and Ethnologue

I Overall spatial inequality (Gini coeffi cient): Inequality inlights per capita across arbitrary regions

I splitting each country in boxes of 2.5 x 2.5 dd (approximately250 km x 250 km; twice the size of mean ethnic homeland)

I Thiessen polygon using as input points the centroids of thelinguistic homelands according to the Ethnologue dataset.

I Any location within a polygon is closer to its associated point thanto points in other polygons.

I Inequality in lights per capita across boxes/pixels and Thiessenpolygons within countries in 1992, 2000, and 2009.

Ethnic Inequality


Inequality Indexes

Ethnic Homelands in Afghanistan - GREG

I

Ü

Ethnic Homelands in AfghanistanAfghanistan Arabs

Afghans

Arabs of Middle Asia

Baloch

Brahui

Burushaskis

FirozKohis

HazaraBerberi

HazaraDehiZainat

Ishkashimis

Jamshidis

Kazakhs

Kho

Kirghis

Mongols

Nuristanis

Ormuri

Pamir Tajiks

Parachi

Pashai

Persians

Roshanls

Russians

Shugnanis

Taimanis

Tajiks

Teymurs

Tirahi

Turkmens

Uzbeks

Yazghulems

Overlapping Languages

Ethnic Inequality


Inequality Indexes

Lights per Capita across Afghan Ethnicities - GREG

IÜ

Lights per Capita in Ethnic Homelands in Afganistan Atlas Narodov Mira

0.000

0 0.

0002

0.000

3 0.

0008

0.000

9

0.001

0 0.

0014

0.001

5 0.

0170

0.017

1 0.

2329

Ethnic Inequality


Inequality Indexes

Spatial Inequality - Boxes/Pixels in Afghanistan

I Ü

Lights per Capita acrossVirtual Countries in Afganistan

0.000

0 0.

0001

0.000

2 0.

0003

0.000

4 0.

0007

0.000

8 0.

0016

0.001

7 0.

0021

0.002

2 0.

0093

Ethnic Inequality


Inequality Indexes

Spatial Inequality - Thiessen Polygons in Afghanistan

Lights per Capita across Thiessen Polygons in Afganistan

High : 0.0078

Low : 0Ü

Ethnic Inequality


Inequality Indexes

The World Distribution of Ethnic Inequality

Ü

Ethnic Inequality Based on the Ethnologue

0.000

000

0.000

001

0.09

6480

0.096

481

0.17

7700

0.177

701

0.23

1200

0.231

201

0.28

6850

0.286

851

0.33

2310

0.332

311

0.38

2640

0.382

641

0.47

7690

0.477

691

0.56

5020

0.565

021

0.61

4520

0.614

521

0.66

0170

0.660

171

0.72

5350

0.725

351

0.76

5720

0.765

721

0.80

5260

0.805

261

0.84

1840

0.841

841

0.86

5090

0.865

091

0.90

9020

0.909

021

0.92

3390

0.923

391

0.93

8430

0.938

431

0.97

7650

Ethnic Inequality


Inequality Indexes

The World Distribution of Spatial Inequality

ÜSpatial Inequality based on boxes of 2.5 x 2.5 decimal degrees

0.000

000

0.000

001

0.12

5460

0.125

461

0.18

6170

0.186

171

0.21

3960

0.213

961

0.25

0270

0.250

271

0.33

7320

0.337

321

0.35

0260

0.350

261

0.41

1980

0.411

981

0.49

0730

0.490

731

0.52

2110

0.522

111

0.59

7510

0.597

511

0.64

3330

0.643

331

0.66

6570

0.666

571

0.69

4380

0.694

381

0.72

1380

0.721

381

0.73

7670

0.737

671

0.77

4920

0.774

921

0.81

3870

0.813

871

0.86

0610

0.860

611

0.97

0380

Ethnic Inequality


Inequality Indexes

Ethnic Inequality Net of Spatial Inequality

ÜEthnic Inequality Partialling Out Spatial Inequality; Ethnologue

0.000

000

0.000

001

0.09

0550

0.090

551

0.18

7790

0.187

791

0.22

7710

0.227

711

0.25

4910

0.254

911

0.35

9650

0.359

651

0.41

8870

0.418

871

0.44

7380

0.447

381

0.54

0690

0.540

691

0.59

6550

0.596

551

0.64

0680

0.640

681

0.69

2770

0.692

771

0.71

7100

0.717

101

0.73

4830

0.734

831

0.76

5040

0.765

041

0.82

2970

0.822

971

0.83

9910

0.839

911

0.88

2870

0.882

871

0.89

7010

0.897

011

0.95

1800

Ethnic Inequality


Inequality Indexes

The World Distribution of Spatial Inequality

I Inequality across Ethnic-Linguistic Homelands

I High Gini ( > 0.90) in Sudan, Chad, Afghanistan, Laos, andMyanmar

I Low Gini in Ireland, Kuwait, Denmark, Luxemburg.

I Overall Spatial Inequality

I High Spatial Inequality (Gini > 0.90): Australia, Somalia,Chad, Mali, Zaire, and Sudan.

I Low Spatial inequality in light density (Gini < 0.10): Trinidadand Tobago, Rwanda, Comoros, Belgium, and other smallcountries (e.g. Bahrain, Jamaica).

Ethnic Inequality

Empirics. Basic Correlations

Ethno-linguistic Fragmentation and Income Inequality

Preliminary Associations

1. Strong correlation of inequality measures between Ethnologueand the Atlas Narodov Mira (GREG)

2. Persistence of ethnic inequality over time 1992− 2009(correlations over 0.95)

3. Persistence of spatial inequality over time 1992− 2009(correlations over 0.95)

4. Positive correlation (0.65− 0.70) between the overall degreeof spatial inequality and ethnic inequality

Ethnic Inequality



Ethnic Inequality and Fragmentation

I Positive and significant association with the ethnic andlinguistic fractionalization index of Alesina et al. (2003),around 0.45− 0.60.

I The correlation with the ethnic and linguistic segregationmeasures of Alesina and Zhuravskaya (2011) is positive,around 0.25− 0.40.

I The correlation with the polarization measures of Montalvoand Reynal-Querol (2005) is below 0.20.

I No association with religiousfractionalization/polarization/segregation

Ethnic Inequality



Ethnic Diversity and Ethnic Inequality

AFGAGO

ALB

ARE

ARG

ARMATG

AUSAUT

AZE

BDI

BEL

BEN

BFA

BGD

BGR

BHR

BHS

BIH

BLR

BLZBOL

BRABRN

BTN

BWA

CAF

CAN

CHE

CHLCHN

CIVCMRCOG

COL

COM

CPV

CRI

CUB

CYP

CZE

DEU

DJI

DMA

DNK

DOM

DZA

ECU

EGY

ERI

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GNQ

GRC

GRD

GTM

GUY

HND

HRV

HTI

HUN

IDN

IND

IRL

IRN

IRQ

ISL

ISR

ITA

JAM

JOR

JPN

KAZ

KEN

KGZ

KHMKNA

KOR

KWT

LAO

LBN

LBR

LBY

LCA

LKA

LSO

LTU

LUX

LVA

MAR

MDA

MDG

MEXMKD

MLI

MLT

MNG

MOZ

MRT

MUS

MWI

MYSNAM

NER

NGA

NIC

NLD

NOR

NPL

NZLOMN

PAK

PAN

PER

PHLPNG

POL

PRT

PRY

QAT

ROM

RUS

RWA

SAU

SDNSEN

SGP

SLB

SLE

SLV

SOM

SUR

SVKSVN

SWESWZ

SYC

SYR

TCD

TGO

THA

TJK

TKM

TON

TTO

TUN

TUR

TZA

UGA

UKR

URY

USA

UZB

VCT

VEN

VNM

VUT

WSM

ZAF

ZAR

ZMB

ZWE

0.2

.4.6

.81

Eth

nic

Frag

men

tatio

n

0 .2 .4 .6 .8 1Gini Ethnic Inequality in 2000; GREG

Unconditional Relationship

Ethnic Fragmentation and Ethnic Inequality, GREG

AFG

AGO

ALB

ARE

ARG

ARMATGAUS

AUT

AZE

BDI

BEL

BENBFA

BGD

BGR

BHR

BHS

BIH

BLR

BLZBOL

BRA

BRN

BTN

BWA

CAF

CAN

CHE

CHL

CHN

CIVCMRCOG

COL

COM

CPV

CRI

CUB

CYPCZE

DEU

DJI

DMA

DNK

DOM

DZA

ECU

EGY

ERI

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GINGMB

GNB

GNQ

GRC

GRD

GTM

GUY

HND

HRV

HTI

HUN

IDN

INDIRL

IRN

IRQ

ISL

ISRITA

JAM

JOR

JPN

KAZKEN

KGZ

KHM

KNA

KOR

KWT

LAO

LBN

LBR

LBY

LCA

LKA

LSO

LTU

LUX

LVA

MAR

MDAMDG

MEX MKD

MLI

MLT

MNGMOZ

MRT

MUS

MWI

MYS

NAM NER

NGA

NIC

NLDNOR

NPLNZL

OMN

PAK

PAN

PER

PHLPNG

POL

PRT

PRY

QAT

ROM

RUS

RWA

SAU

SDNSEN

SGP

SLB

SLE

SLV

SOM

SUR

SVKSVN SWE

SWZ

SYC

SYR

TCD

TGO

THA

TJK

TKM

TON

TTO

TUN

TUR

TZA

UGA

UKR

URY

USA

UZB

VCT

VEN

VNM

VUT

WSM

ZAF

ZAR

ZMB

ZWE

.6.4

.20

.2.4

Eth

nic

Frag

men

tatio

n

.5 0 .5Gini Ethnic Inequality in 2000; GREG

Conditional on Region Fixed Effects

Ethnic Fragmentation and Ethnic Inequality

Ethnic Inequality



Ethnic Inequality and Income Inequality

I Positive (weak-to-moderate) association between incomeinequality and ethnic inequality.

I Positive (weak-to-moderate) association between incomeinequality and the overall degree of spatial inequality.

I Correlation between ethnic inequality and income inequalityweakens once we condition on the overall degree of spatialinequality and loses (economic and statistical) significancewhen we condition on region (continental) fixed-effects

I Ethnic inequality captures something different thanincome inequality (though measurement issues are non-negligible)

Ethnic Inequality



Ethnic Inequality and Income Inequality

ARG

ARM

AUS

AUT

AZE

BDI

BEL

BFA

BGD

BGR

BHS

BIH

BLR

BOL

BRA

BWA

CAF

CAN

CHE

CHL

CHN

CIV

COL

CRI

CZE

DEUDNK

DOM

DZA

ECU

EGYESP

EST ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GINGMB

GRC

GTMGUY

HND

HUN

IDNIND

IRL

IRQ

ISR

ITA

JAMJOR

JPN

KAZ

KEN

KGZ

KHM

KORLAO

LBN

LKA

LSO

LTU

LUX

LVA

MDA

MDG MEX

MKD

MLI

MNG

MRTMUS

MYS

NER

NGA

NIC

NLDNOR

NPL

NZLPAK

PAN

PERPHL

PNG

POL

PRT

PRY

ROM

RUS

RWA

SDN

SEN

SGP

SLE

SLV

SUR

SVK

SVN

SWE

SWZ

TCD

THA

TKM

TTOTUN

TUR

TZA

UGA

UKR

URY

USA

VEN

VNM

ZAF

ZMB

ZWE

2030

4050

6070

Gin

i Coe

ffici

et

Inco

me

Ineq

ualit

y



Income Inequality and Ethnic Inequality, GREG

ARG

ARM

AUS

AUT

AZE

BDI

BEL

BFA

BGD

BGR

BHS

BIH

BLR

BOL

BRA

BWA

CAF

CAN

CHE

CHL

CHN

CIV

COL

CRI

CZE

DEUDNK

DOM

DZAECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GINGMB

GRC

GTM

GUY

HND

HUN

IDNIND

IRL

IRQ

ISR

ITA

JAM

JOR

JPN

KAZ

KEN

KGZ

KHM

KORLAO

LBN

LKA

LSO

LTU

LUX

LVA

MDA

MDG MEX

MKD

MLI

MNG

MRTMUS

MYS

NER

NGA

NIC

NLDNOR

NPL

NZLPAK

PAN

PER

PHL

PNG

POL

PRT

PRY

ROM

RUS

RWA

SDN

SEN

SGP

SLE

SLV

SUR

SVK

SVN

SWE

SWZ

TCD

THA

TKM

TTO

TUN

TUR

TZA

UGA

UKRURY

USA

VEN

VNM

ZAF

ZMB

ZWE

20

10

010

20G

ini C

oeffi

cien

t In

com

e In

equa

lity

.6 .4 .2 0 .2 .4Gini Ethnic Inequality in 2000; GREG

Conditional on Region Effects

Income Inequality and Ethnic Inequality

Ethnic Inequality

Ethnic Inequality and Economic Development across Countries

Cross-Country Analysis

I Graphical illustration

I Baseline regression results (conditional correlations)

I Sensitivity analysis (appendix)

Ethnic Inequality


Graphical Illustration

Ethnic Inequality and Comparative Development

AFG

AGO

ALB

ARE

ARG

ARM

ATG

AUSAUT

AZE

BDI

BEL

BENBFA

BGD

BGR

BHRBHS

BIHBLRBLZ

BOL

BRA

BRN

BTN

BWA

CAF

CANCHE

CHL

CHN

CIV CMRCOG

COL

COM

CPV

CRICUB

CYPCZE

DEU

DJI

DMA

DNK

DOM

DZAECUEGY

ERI

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHAGINGMB

GNB

GNQ

GRC

GRD

GTM

GUYHND

HRV

HTI

HUN

IDN

IND

IRL

IRN

IRQ

ISL

ISRITA

JAM

JOR

JPN

KAZ

KEN

KGZ

KHM

KNA

KOR

KWT

LAO

LBN

LBR

LBY

LCA

LKA

LSO

LTU

LUX

LVA

MAR

MDA

MDG

MEX

MKD

MLI

MLT

MNG

MOZ

MRT

MUS

MWI

MYS

NAM

NER

NGA

NIC

NLDNOR

NPL

NZLOMN

PAK

PANPER

PHLPNG

POL

PRT

PRY

QAT

ROMRUS

RWA

SAU

SDNSEN

SGP

SLB

SLE

SLV

SOM

SUR

SVK

SVN

SWE

SWZ

SYC

SYR

TCDTGO

THA

TJK

TKM

TON

TTO

TUN

TUR

TZA UGA

UKR

URY

USA

UZB

VCT

VEN

VNM

VUTWSM ZAF

ZAR

ZMB

ZWE

46

810

12Ln

(GD

P pe

r Cap

ita) i

n 20

00




AFG

AGO

ALB

ARE

ARG

ARM

ATG

AUSAUT

AZE

BDI

BEL

BENBFA

BGD

BGR

BHRBHS

BIHBLRBLZ

BOL

BRA

BRN

BTN

BWA

CAF

CANCHE

CHL

CHN

CIV CMRCOG

COL

COM

CPV

CRICUB

CYPCZE

DEU

DJI

DMA

DNK

DOM

DZAECUEGY

ERI

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHAGINGMB

GNB

GNQ

GRC

GRD

GTM

GUYHND

HRV

HTI

HUN

IDN

IND

IRL

IRN

IRQ

ISL

ISRITA

JAM

JOR

JPN

KAZ

KEN

KGZ

KHM

KNA

KOR

KWT

LAO

LBN

LBR

LBY

LCA

LKA

LSO

LTU

LUX

LVA

MAR

MDA

MDG

MEX

MKD

MLI

MLT

MNG

MOZ

MRT

MUS

MWI

MYS

NAM

NER

NGA

NIC

NLDNOR

NPL

NZLOMN

PAK

PANPER

PHL PNG

POL

PRT

PRY

QAT

ROMRUS

RWA

SAU

SDNSEN

SGP

SLB

SLE

SLV

SOM

SUR

SVK

SVN

SWE

SWZ

SYC

SYR

TCDTGO

THA

TJK

TKM

TON

TTO

TUN

TUR

TZAUGA

UKR

URY

USA

UZB

VCT

VEN

VNM

VUTWSM ZAF

ZAR

ZMB

ZWE

46

810

12Ln

(GD

P pe

r Cap

ita) i

n 20

00

0 .2 .4 .6 .8 1Gini Ethnic Inequality in 2000; ETHNOLOGUE



Ethnic Inequality


Graphical Illustration

Ethnic Inequality and Comparative Development,conditional on Region Effects

AFG

AGO

ALB

ARE

ARG

ARM

ATG

AUS

AUT

AZE

BDI

BEL BEN

BFABGD

BGR

BHR

BHS

BIHBLR BLZ

BOL

BRA

BRN

BTN

BWA

CAF

CANCHE

CHL

CHN

CIVCMR

COG

COLCOM

CPV

CRICUB

CYP

CZE

DEU

DJI

DMA

DNKDOM

DZA

ECU

EGY

ERIESP

EST

ETH

FINFJI

FRA

GAB

GBR

GEO

GHAGINGMB

GNB

GNQ

GRCGRD

GTM

GUYHND

HRV

HTI

HUN

IDN

IND

IRL

IRN

IRQ

ISL

ISR

ITA

JAM

JOR

JPN

KAZKEN

KGZ

KHM

KNA

KOR KWT

LAO

LBN

LBR

LBYLCALKA

LSO

LTULUX

LVA

MAR

MDA

MDG

MEX

MKD

MLI

MLT

MNGMOZ

MRT

MUS

MWI

MYS

NAM

NER

NGA

NIC

NLDNOR

NPL

NZL

OMNPAK

PAN

PER

PHLPNG

POLPRT

PRY

QAT

ROM

RUS

RWA

SAU SDN

SEN

SGP

SLB

SLE

SLV

SOM

SUR

SVK

SVN

SWE

SWZ

SYC

SYR

TCDTGO

THA

TJK

TKM

TON

TTO

TUN

TUR

TZAUGAUKR

URYUSA

UZB

VCT

VEN

VNM

VUTWSM

ZAF

ZAR

ZMB

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21

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2000

.5 0 .5Gini Ethnic Inequality in 2000; GREG



AFG

AGO

ALB

ARE

ARG

ARM

ATG

AUS

AUT

AZE

BDI

BEL BEN

BFABGD

BGR

BHR

BHS

BIHBLR BLZ

BOL

BRA

BRN

BTN

BWA

CAF

CANCHE

CHL

CHN

CIVCMR

COG

COLCOM

CPV

CRICUB

CYP

CZE

DEU

DJI

DMA

DNKDOM

DZA

ECU

EGY

ERIESP

EST

ETH

FINFJI

FRA

GAB

GBR

GEO

GHAGINGMB

GNB

GNQ

GRCGRD

GTM

GUYHND

HRV

HTI

HUN

IDN

IND

IRL

IRN

IRQ

ISL

ISR

ITA

JAM

JOR

JPN

KAZKEN

KGZ

KHM

KNA

KOR KWT

LAO

LBN

LBR

LBYLCALKA

LSO

LTULUX

LVA

MAR

MDA

MDG

MEX

MKD

MLI

MLT

MNGMOZ

MRT

MUS

MWI

MYS

NAM

NER

NGA

NIC

NLDNOR

NPL

NZL

OMNPAK

PAN

PER

PHLPNG

POLPRT

PRY

QAT

ROM

RUS

RWA

SAU SDN

SEN

SGP

SLB

SLE

SLV

SOM

SUR

SVK

SVN

SWE

SWZ

SYC

SYR

TCDTGO

THA

TJK

TKM

TON

TTO

TUN

TUR

TZAUGAUKR

URYUSA

UZB

VCT

VEN

VNM

VUTWSM

ZAF

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ZMB

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21

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.5 0 .5Gini Ethnic Inequality in 2000; ETHNOLOGUE



Ethnic Inequality


Regression Analysis

Baseline Results with Atlas Narodov Mira

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Ethnic Inequality 1.4707*** 1.4003*** 1.4985*** 1.1868*** 1.1099** 1.2446** 1.3447*** 1.4580*** [Gini Coeff., GREG] (0.2504) (0.3633) (0.4018) (0.4069) (0.5045) (0.4835) (0.5148) (0.4905)

5.87 3.85 3.73 2.92 2.20 2.57 2.61 2.97

Spatial Inequality 1 1.1508*** 0.1112 0.1186 0.0592 [Gini Coeff., Pixels] (0.2786) (0.3780) (0.3809) (0.3820)

4.13 0.29 0.31 0.15

Spatial Inequality 2 1.1612*** 0.0373 0.0880 0.1060 [Gini Coeff., Thiessen Polyg] (0.2559) (0.3961) (0.4084) (0.4155)

4.54 0.09 0.22 0.26

Log Number of Languages 0.3037*** 0.0887 0.0893 0.0912 0.1675 0.1723 [GREG] (0.0605) (0.0930) (0.0936) (0.0949) (0.1286) (0.1304)

5.02 0.95 0.95 0.96 1.30 1.32

Ethnic Inequality in Population 0.5164 0.5305 [Gini Coeff., GREG] (0.4472) (0.4465)

1.15 1.19

adjusted Rsquared 0.661 0.626 0.659 0.631 0.659 0.643 0.661 0.659 0.659 0.659 0.659observations 173 173 173 173 173 173 173 173 173 173 173Region Fixed Effects Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Ethnic Inequality


Regression Analysis

Baseline Results with Ethnologue

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Ethnic Inequality 1.1281*** 1.0245*** 1.0839*** 1.2806*** 1.1734** 1.2309***1.0657*** 1.2554*** [Gini Coeff., ETHNO] (0.2267) (0.2975) (0.3817) (0.3694) (0.4625) (0.4528) (0.3747) (0.4300)

4.98 3.44 2.84 3.47 2.54 2.72 2.84 2.92

Spatial Inequality 1 1.1508*** 0.2035 0.1857 0.1531 [Gini Coeff., Pixels] (0.2786) (0.3524) (0.3617) (0.3508)

4.13 0.58 0.51 0.44

Spatial Inequality 2 1.1612*** 0.0732 0.0884 0.1967 [Gini Coeff., Thiessen Polyg] (0.2559) (0.4343) (0.4354) (0.4539)

4.54 0.17 0.20 0.43

Log Number of Languages 0.1730*** 0.0389 0.0357 0.0399 [ETHNO] (0.0467) (0.0741) (0.0759) (0.0751)

3.70 0.53 0.47 0.53

Ethnic Inequality in Population 0.6678* 0.7013* [Gini Coeff., ETHNO] (0.3727) (0.3742)

1.79 1.87

adjusted Rsquared 0.654 0.626 0.653 0.631 0.652 0.625 0.653 0.651 0.651 0.66 0.661observations 173 173 173 173 173 173 173 173 173 173 173Region Fixed Effects Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Ethnic Inequality


Regression Analysis

Conditional on Other Aspects of Diversity

(1) (2) (3) (4) (5) (6) (7) (8)

Ethnic Inequality 1.4977*** 1.6771*** 1.5567*** 1.5782*** 1.1099*** 0.8248** 1.1186*** 1.1438*** [Gini Coeff.] (0.4011) (0.3955) (0.4075) (0.3924) (0.3716) (0.3417) (0.3744) (0.3756)

Ethnic Fragmentation 0.0097 0.1256 (0.3590) (0.3431)

Cultural Fragmentation 0.3417 0.0339 (0.3520) (0.3469)

Ethnolinguistic Polarization 1 0.464 0.5817 (0.9745) (0.9820)

Ethnolinguistic Polarization 2 1.9997 2.1173* (1.2688) (1.1802)

Spatial Inequality 2 0.0397 0.0739 0.0641 0.0563 0.0862 0.468 0.0577 0.0568 [Gini Coeff.] (0.4163) (0.4827) (0.3928) (0.3845) (0.4408) (0.4760) (0.4230) (0.4224)

adjusted Rsquared 0.657 0.694 0.653 0.658 0.65 0.675 0.646 0.651observations 173 150 172 172 173 150 172 172Region Fixed Effects Yes Yes Yes Yes Yes Yes Yes Yes

Atlas Narodov Mira (GREG) Ethnologue

Ethnic Inequality


Regression Analysis

Sensitivity Analysis

I excluding ethnicities with less than 1% of a country’spopulation

I dropping any continent

I excluding regions where capital cities fall (ethnic mixing,outliers)

I excluding countries with a single ethnic-linguistic group

I conditioning on geography. [log of population, log land area,terrain ruggedness, distance to the coast, the percentage of arableland, an index of soil quality, and the percentage of tropical land(these are the same controls as Nunn and Puga in "Ruggedness: The Blessing

of Bad Geography", RecStat 2012).]

Ethnic Inequality


Regression Analysis

Overview of Cross-Country EvidenceI Strong association between ethnic inequality and economicdevelopment

I Not driven by the overall degree of spatial inequality

I Not driven by ethnic fragmentation or income inequality

I The negative correlation between ethnic fragmentation andeconomic development weakens (and turns insignificant inmany specifications) once we account for ethnic inequality

I Issues: Endogeneity

I Reverse causation

I Omitted variables

I Measurement error

Ethnic Inequality

A Primer on the Origins of Ethnic Inequality

Idea and Preliminary Evidence

Origins of Ethnic Inequality

I Given the strong negative association of ethnic inequality withdevelopment, it is worthwhile to explore its origins

I Starting point => Usual correlates of economic development(type of colonization; legal origins; state antiquity; geography):Not much.

I Link inequality in endowments across ethnic homelands withethnic inequality

I Michalopoulos (2012) shows that ethnic groups reside ondifferent land endowments.

I Inequality in the distribution of ethnic land endowments mayexplain differences in economic performance across groups.

Ethnic Inequality



Geographic Origins of Ethnic Inequality

Using geo-referenced data sets we construct inequality measures(Gini coeffi cients) across ethnic homelands across the following di-mensions:

1. Inequality in elevation

2. Inequality in land quality/suitability for agriculture

3. Inequality in distance to the coast

4. Inequality in the presence of water (rivers, lakes, and otherstreams)

I As in our earlier analysis we also calculate geographicinequality using boxes/pixels and Thiessen polygons.

Ethnic Inequality



From Geographic to Economic Inequality

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

Gini Coef. Sea Distance 0.0489 0.1379 0.1857 0.0552 0.1090 0.1961 0.0355 0.1886 0.1756 0.0897 0.0276 0.0231 (0.0956) (0.1231) (0.1156) (0.1274) (0.1611) (0.1494) (0.0969) (0.1567) (0.1622) (0.1143) (0.1639) (0.1481)

Gini Coef. Elevation 0.4343 0.8727 0.6973 0.0953 0.1046 0.0754 0.6292 3.0353** 1.7750 0.0027** 0.0038*** 0.0019 (0.3304) (0.6673) (0.6334) (0.1206) (0.1262) (0.1178) (0.4782) (1.2705) 1.2926 (0.0010) (0.0011) (0.0012)

Gini Coeff. Land Quality 0.2528*** 0.1028 0.121 0.3067*** 0.1227 0.1227 0.3680*** 0.6496***0.6000*** 0.3338*** 0.4759** 0.4116** (0.0910) (0.1775) (0.1813) (0.0935) (0.1816) (0.1872) (0.0978) (0.2038) (0.1654) (0.0922) (0.1873) (0.1658)

Gini Coeff. Water Area 0.5632***0.4985***0.4744*** 0.4476*** 0.4011*** 0.3914*** 0.6698*** 0.5550***0.5862*** 0.5238***0.4206***0.4330*** (0.0550) (0.0773) (0.0733) (0.0970) (0.1275) (0.1280) (0.0621) (0.0857) (0.0875) (0.0786) (0.0997) (0.0934)

adjusted Rsquared 0.674 0.6674 0.6408 0.5967 0.5988 0.6078 0.7511 0.7537 0.7595 0.7169 0.714 0.7398Observations 173 169 162 151 150 150 168 166 160 144 143 142

Region Fixed Effects Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesControls No Spatial No Spatial No Spatial No Spatial

Excl. CapitalsAtlas Narodov Mira (GREG) Ethnologue

All Ethnic Areas Excl. Capitals All Ethnic Areas

Spatial& Level

Spatial& Level

Spatial& Level

Spatial& Level

Ethnic Inequality


A Composite Index of Inequality across Ethnic Homelands

Issues

I Several measures of inequality in land endowments acrossethnic homelands (one could construct many more)

I No strong priors which aspect of geographic differences wouldmatter most (elevation, access to water, land suitability for agriculture)

I Measurement issues

Ethnic Inequality



Approach -Factor Analysis

I Extract common factor(s) of inequality in geographicendowments across ethnic homelands

I principal component analysis

I Construct a composite index of inequality in geographicendowments across ethnic homelands

I Also construct a composite inequality index of geographicendowments using boxes/pixels and Thiessen polygons (ratherthan ethnic homelands)

Ethnic Inequality



Principal Component Analysis

Eigenvalue Variable 1st PC 2nd PC 3rd PC 4th PC

1st Principal Component 2.474 0.618 Gini Sea Distance 0.482 0.666 0.080 0.5632nd Principal Component 0.708 0.177 Gini Elevation 0.491 0.444 0.720 0.2083rd Principal Component 0.481 0.120 Gini Land Quality 0.479 0.531 0.689 0.1204th Principal Component 0.337 0.084 Gini Water Area 0.545 0.277 0.027 0.791




Factor Loadings

Panel A: Gini Coefficient GREG All Groups (173 countries)

Panel B: Gini Coefficient GREG Excluding Capitals (151 countries)

Panel C: Gini Coefficient ETHNOLOGUE All Groups (168 countries)

Panel D: Gini Coefficient ETHNOLOGUE Excluding Capitals (144 countries)

VarianceExplained

Ethnic Inequality


Inequality on Land Endowments across Ethnic Homelands, Contemporary Ethnic Inequality, and Development

Inequality in Land Endowments across Ethnic Homelandsand Contemporary Ethnic Inequality

AFG

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BTN

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CAF

CAN

CHE

CHL

CHN

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COL

COMCPV

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CUB

CYPCZE

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4 2 0 2 4Inequality in Geographic Endowments across Ethnic Homelands

1st Principal Component


Inequality in Geography and Contemporary Ethnic Inequality

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AUS

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4 2 0 2 4Inequality in Geographic Endowments across Ethnic Homelands

1st Principal Component


Inequality in Geography and Contemporary Ethnic Inequality

Ethnic Inequality



Regression Results

(1) (2) (3) (4) (5) (6)

0.1227*** 0.1089*** 0.0973*** 0.1613*** 0.1523*** 0.1588***(0.0088) (0.0178) (0.0171) (0.0095) (0.0196) (0.0199)14.00 6.13 5.70 16.99 7.76 7.98

0.0109 0.0068 0.0075 0.006(0.0182) (0.0194) (0.0202) (0.0228)

0.6 0.35 0.37 0.26

Adjusted Rsquared 0.623 0.616 0.605 0.695 0.689 0.688Observations 173 169 162 168 166 160Region Fixed Effects Yes Yes Yes Yes Yes YesAdditional Controls No No Geography No No Geography


Inequality in Geographic Endowmentsacross Ethnic Homelands (PC)

Spatial Inequality in GeographicEndowments (PC)

Ethnic Inequality



Ethnic Inequality in Land Endowments and ComparativeDevelopment

I Examine the association between inequality in geographicendowments across ethnic homelands and contemporarydevelopment

I Merits

I Sensitivity analysis (to the benchmark measure of inequalitybased on satellite images on light density at night)

I Predetermined measure of inequality across ethnic homelands

Ethnic Inequality



Geographic Inequality Across Groups and Development

(1) (2) (3) (4) (5) (6)

0.1789*** 0.2311*** 0.1770** 0.1611*** 0.0580 0.1526*(0.0405) (0.0851) (0.0891) (0.0459) (0.0956) (0.0860)4.42 2.71 1.99 3.51 0.61 1.78

0.0755 0.048 0.0898 0.0268(0.0970) (0.1113) (0.0986) (0.1093)

0.78 0.43 0.91 0.24

adjusted Rsquared 0.629 0.646 0.668 0.623 0.639 0.673Observations 173 169 162 168 166 160Region FixedEffects Yes Yes Yes Yes Yes YesAdditional Controls No No Geography No No Geography


Inequality in Geographic Endowmentsacross Ethnic Homelands (PC)

Spatial Inequality in GeographicEndowments (PC)

Ethnic Inequality

Micro Analysis within Sub-Saharan African Countries

Approach

Afrobarometer SampleI Geo-referenced household data (from AfrobarometerSurveys) on

I Ethnic affi liation

I Access to public goods (electricity, clean water, sewage system)

I Self-reported living conditions and education

I Merits

I Explore regional (within country) variation

I Explore within-country within-ethnicity variation (moversnon-movers)

I Heterogeneous effects (urban/rural households, etc).

I Decompose overall inequality into within and between-group

Ethnic Inequality


Results

Baseline Within-Country Results

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

BetweenGroup Ineq. 4.9156***6.2329***4.8300***5.0611***2.3742***2.4819***1.8750***1.8256***1.6597**1.5788**1.8920***1.9359*** [Theil Index] (0.7928) (1.0646) (1.0006) (1.1533) (0.5946) (0.6418) (0.4573) (0.4840) (0.7693) (0.7102) (0.5349) (0.5335)

WithinGroup Ineq. 2.7822***5.8355***3.3152***3.7319***0.9359***1.0316*** 0.6892 0.4841 1.2840***1.1552*** 0.6372* 0.4502 [Theil Index] (0.9196) (1.0642) (0.5246) (0.9003) (0.2653) (0.3009) (0.4133) (0.5473) (0.2040) (0.2944) (0.3226) (0.4504)

Log Number of Groups 0.2881*** 0.0740** 0.6018*** 0.5680*** 0.2008*** 0.1715***0.1697***0.1551***0.2412***0.2291***0.2756*** 0.2935*** (0.0802) (0.0321) (0.0741) (0.0982) (0.0248) (0.0282) (0.0462) (0.0448) (0.0460) (0.0568) (0.0252) (0.0320)

adjusted Rsquared 0.359 0.517 0.509 0.552 0.215 0.243 0.216 0.220 0.314 0.304 0.175 0.186Observations 1301 861 1301 861 1286 856 1280 852 1292 858 1301 861Country FE Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesSample All >1 groups All >1 groups All >1 groups All >1 groups All >1 groups All >1 groups

UrbanizationLiving Conditions Education Piped Water Sewage System Electricity Grid

Ethnic Inequality


Results

Afrobarometer Sample

I Explore within-country, within-ethnicity across regionvariation.

I People from the same ethnic group are present in manyenumeration areas

Ethnic Inequality


Results

Within-Country Within-Ethnicity Results

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

BetweenGroup Ineq. 4.9156***6.2329***4.8300***5.0611***2.3742***2.4819***1.8750***1.8256***1.6597**1.5788**1.8920***1.9359*** [Theil Index] (0.7928) (1.0646) (1.0006) (1.1533) (0.5946) (0.6418) (0.4573) (0.4840) (0.7693) (0.7102) (0.5349) (0.5335)

WithinGroup Ineq. 2.7822***5.8355***3.3152***3.7319***0.9359***1.0316*** 0.6892 0.4841 1.2840***1.1552*** 0.6372* 0.4502 [Theil Index] (0.9196) (1.0642) (0.5246) (0.9003) (0.2653) (0.3009) (0.4133) (0.5473) (0.2040) (0.2944) (0.3226) (0.4504)

Log Number of Groups 0.2881*** 0.0740** 0.6018*** 0.5680*** 0.2008*** 0.1715***0.1697***0.1551***0.2412***0.2291***0.2756*** 0.2935*** (0.0802) (0.0321) (0.0741) (0.0982) (0.0248) (0.0282) (0.0462) (0.0448) (0.0460) (0.0568) (0.0252) (0.0320)

adjusted Rsquared 0.359 0.517 0.509 0.552 0.215 0.243 0.216 0.220 0.314 0.304 0.175 0.186Observations 1301 861 1301 861 1286 856 1280 852 1292 858 1301 861Country FE Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesSample All >1 groups All >1 groups All >1 groups All >1 groups All >1 groups All >1 groups

UrbanizationLiving Conditions Education Piped Water Sewage System Electricity Grid

Ethnic Inequality

Conclusion

Contribution

Look beyond Inequality and Fragmentation

I Construct indicators of ethnic inequalityI combining linguistic-ethnic maps with satellite images on lightdensity at night

I Strong negative correlation between ethnic inequality andcomparative development

I conditional on the overall degree of spatial inequality

I Exploration of the origins of ethnic inequalityI a sizeable fraction is driven by inequality of group-specificgeographic endowments

I Significant negative correlation between ethnic inequality inendowments and development

I conditional on the overall degree of spatial inequality ingeography

Ethnic Inequality

Conclusion

Contribution

Further Evidence

I Examine the association between ethnic inequality anddevelopment and public goods provision using micro-level datafrom Sub-Saharan African countries

I explore within country variation (account for country fixedfactors, policies and even ethnic factors.)

I use alternative to luminosity individual-level level data

I focus on most ethnically diverse place in the world whereethnicity is particularly salient

I condition on the overall (non-ethnic) degree of inequality(decomposition)

Ethnic Inequality

Conclusion

Subsequent Research

Channels

Switch focus of literature (both empirical and theoretical)

1. Pro-market reforms rejected

2. Hatred and civil conflict

3. Ineffi cient provision of public goods

4. Alternative measures (various dimmensions)

5. Formal theoretical work

2013 Alesina Michalopoulos Papaioannu Eth Inequality Slides

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