155/2013 Alberto Alesina, Stelios Michalopoulos and Elias Papaioannou

This study explores the consequences and origins of between-ethnicity economic inequality both across and within countries. First, combining satellite images of night-time luminosity with the historical homelands of ethnolinguistic groups we construct measures of ethnic inequality for a large sample of countries and show that the latter is strongly inversely related to comparative development. Second, differences in geographic endowments across ethnic homelands explain a sizable portion of ethnic inequality contributing to its persistence over time. Third, exploiting across-district within-African countries variation using individual-level data on ethnic identification and well-being from the Afro-barometer Surveys we find that between ethnic-group inequality is systematically linked to regional under-development. In this sample we also explore the channels linking ethnic inequality to (under) development, finding that ethnic inequality maps to political inequality, heightened perceptions of discrimination and undersupply of public goods.

Culture and Development

Journal of Political Economy

http://dx.doi.org/10.1086/685300