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Ethnic Inequality and Economic Growth: Evidence from Harmonized Satellite Data

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  • Klaus Gründler
  • Andreas Link

Abstract

Inequality between ethnic groups has been shown to be negatively related to GDP, but research on its effect on contemporary economic growth is limited by the availability of comparable data. We compile a novel and comprehensive dataset of harmonized Gini indices on ethnic inequality for countries and sub-national units between 1992 and 2013. Our approach exploits differentials in nighttime lights (NTL) across ethnic homelands, using new techniques to harmonize NTL series across geographic regions and years to address concerns about spatial and temporal incomparability of satellite photographs. Our new data shows that ethnic inequality is widespread across countries but has decreased over time. Exploiting the artificiality of sub-national borders in an instrumental variable setting, we provide evidence that income inequality across ethnic groups reduces contemporary economic growth. The negative effect of ethnic inequality is caused by increasing conflict and decreasing public goods provision.

Suggested Citation

  • Klaus Gründler & Andreas Link, 2024. "Ethnic Inequality and Economic Growth: Evidence from Harmonized Satellite Data," CESifo Working Paper Series 11034, CESifo.
    • Handle: RePEc:ces:ceswps:_11034
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    References listed on IDEAS

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    1. Daron Acemoglu & Suresh Naidu & Pascual Restrepo & James A. Robinson, 2019. "Democracy Does Cause Growth," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 47-100.
    2. Anna Bruederle & Roland Hodler, 2018. "Nighttime lights as a proxy for human development at the local level," PLOS ONE, Public Library of Science, vol. 13(9), pages 1-22, September.
    3. Andreas P. Kyriacou, 2013. "Ethnic Group Inequalities and Governance: Evidence from Developing Countries," Kyklos, Wiley Blackwell, vol. 66(1), pages 78-101, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    ethnic inequality; economic development; regional data; nighttime lights; satellite photographs; calibration; ethnic groups; conflict; public goods provision;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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