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Nation formation and genetic diversity

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  • DESMET, Klaus
  • LE BRETON, Michel
  • ORTUNO-ORTIN, Ignacio
  • WEBER, Shlomo

Abstract

This paper presents a model of nation formation in which culturally heterogeneous agents vote on the optimal level of public spending. Larger nations benefit from increasing returns in the provision of public goods, but bear the costs of greater cultural heterogeneity. This tradeoff induces agents? preferences over different geographical configurations, thus determining the likelihood of secession and unification. We provide empirical support for choosing genetic distances as a proxy of cultural heterogeneity. By using data on genetic distances, we examine the stability of the current map of Europe and identify the regions prone to secession and the countries that are more likely to merge. Our framework is further applied to estimate the welfare gains from European Union membership.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2006095.

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Date of creation: 00 Oct 2006
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Handle: RePEc:cor:louvco:2006095

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Keywords: nation formation; genetic diversity; cultural heterogeneity; secession; unification; European Union;

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References

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  1. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "Cultural Biases in Economic Exchange," NBER Working Papers 11005, National Bureau of Economic Research, Inc.
  2. Bolton, Patrick & Roland, Gérard, 1995. "The Break up of Nations: A Political Economy Analysis," CEPR Discussion Papers 1225, C.E.P.R. Discussion Papers.
  3. Campbell, John Y., 1999. "Asset prices, consumption, and the business cycle," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 19, pages 1231-1303 Elsevier.
  4. Wacziarg, Romain & Spolaore, Enrico, 2006. "The Diffusion of Development," Research Papers 1898r1, Stanford University, Graduate School of Business.
  5. William Easterly & Alberto Alesina & Janina Matuszeski, 2006. "Artificial States," Working Papers 100, Center for Global Development.
  6. Friend, Irwin & Blume, Marshall E, 1975. "The Demand for Risky Assets," American Economic Review, American Economic Association, vol. 65(5), pages 900-922, December.
  7. Victor Ginsburgh & Ignacio Ortuno-Ortin & Shlomo Weber, 2005. "Disenfranchisement in linguistically diverse societies: the case of the European Union," ULB Institutional Repository 2013/1951, ULB -- Universite Libre de Bruxelles.
  8. Bogomolnaia, Anna & Jackson, Matthew O., 2002. "The Stability of Hedonic Coalition Structures," Games and Economic Behavior, Elsevier, vol. 38(2), pages 201-230, February.
  9. DESMET, Klaus & ORTUNO-ORTIN, Ignacio & WEBER, Shlomo, 2005. "Peripheral diversity and redistribution," CORE Discussion Papers 2005044, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Alesina, Alberto & Spolaore, Enrico, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1027-56, November.
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  12. Le Breton, M. & Weber, S., 1995. "Stability of Coalition Structures and the Principle of Optimal Partitioning," G.R.E.Q.A.M. 95a06, Universite Aix-Marseille III.
  13. repec:rus:hseeco:71039 is not listed on IDEAS
  14. Spolaore, Enrico & Wacziarg, Romain, 2005. "Borders and Growth," CEPR Discussion Papers 5202, C.E.P.R. Discussion Papers.
  15. Igal Milchtaich & Eyal Winter, 2000. "Stability and Segregation in Group Formation," Discussion Paper Series dp263, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  16. Suryapratim Banerjee & Hideo Konishi & Tayfun Sonmez, 1999. "Core in a Simple Coalition Formation Game," Boston College Working Papers in Economics 449, Boston College Department of Economics.
  17. Collado, M. Dolores & Ortuño Ortin, Ignacio & Romeu, Andrés, 2008. "Vertical Transmission of Consumption Behavior and the Distribution of Surnames," UMUFAE Economics Working Papers 2651, DIGITUM. Universidad de Murcia.
  18. Giuliano, Paola & Spilimbergo, Antonio & Tonon, Giovanni, 2006. "Genetic, Cultural and Geographical Distances," IZA Discussion Papers 2229, Institute for the Study of Labor (IZA).
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