Ethnic Heterogeneity and Public Goods Provision

The level of public goods provided in a society is important not only because it contributes to social inclusion and strengthens a shared sense of citizenship, but also because it is a fundamental pre-condition for long term growth and development. Studying the determinants of public goods provision levels, hence, becomes an important exercise. The negative association between ethnic heterogeneity and public goods provision is one such robust empirical finding in political science and economics. Despite the abundance of scholarly work on the topic, the causal mechanisms offered in the literature do not pay attention to the political process involved. The rational choice approaches simply model the relationship as a voluntary contribution game. This paper addresses this gap by offering a theoretical mechanism based on a legislative bargaining framework. We also provide a discussion on a potential extension of the framework where ethnic groups are endogenous.