Tribe or Title? The Effect of Coethnic Neighbors on the Demand for Formal Property Rights in a Tanzanian Slum

This paper examines the relationship between ethnic heterogeneity and the demand for formal land tenure in urban Tanzania. Using a unique census of two highly fractionalized unplanned settlements in Dar es Salaam, I show that households located near coethnics are significantly less likely to purchase a limited form of land tenure offered by the government. I attempt to address the issue of endogenous sorting by conditioning on a household’s choice of coethnic neighbors upon arrival in the neighborhood. I also find that coethnic residence predicts lower levels of perceived expropriation risk but not perceived access to credit or contributions to local public goods. These results suggest that close-knit ethnic groups may be less likely to accept state-provided goods due to their ability to generate reasonable substitutes, in this case protection from expropriation. The results are robust to different definitions of coethnicity and spatial cutoffs, controls for family ties and religious similarity, and spatial fixed effects. Finally, the main result is confirmed using a large-scale administrative data set covering more than 20,000 land parcels in the city, exploiting ethnically unique last names to predict tribal affiliation.