Inequality And Group Participation: Theory And Evidence From Rural Tanzania
AbstractThis paper investigates the determinants of group membership, and in particular the effect of income inequality on individual incentives to join economic groups. Drawing on a simple model, we show that an increase in inequality has an ambiguous effect and that the type of access rule (open versus restricted access) is key in determining what income categories are represented in the group. Furthermore, the shape of the income distribution can be crucial to determine whether increased inequality leads to more or less group participation. Using survey data from rural Tanzania we find that inequality at the village level has a negative impact on the likelihood that the respondents are members of any group. This effect is particularly significant for relatively wealthier people, both when relative wealth is 'objectively' measured, and when it is 'subjectively' defined. However, when we disaggregate groups by type of access rule, we find that inequality decreases participation in open access groups when there are wide disparities at the bottom of the distribution, while it increases participation in restricted access groups when the disparities are around the middle and top part of the distribution. Finally, we assess the impact of inequality on various dimensions of group functioning.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2433.
Date of creation: Apr 2000
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Other versions of this item:
- La Ferrara, Eliana, 2002. "Inequality and group participation: theory and evidence from rural Tanzania," Journal of Public Economics, Elsevier, vol. 85(2), pages 235-273, August.
- Eliana La Ferrara, 2000. "Inequality and Group Participation: Theory and Evidence from Rural Tanzania," Development Working Papers 138, Centro Studi Luca d\'Agliano, University of Milano.
- Eliana La Ferrara, . "Inequality and Group Participation: Theory and Evidence from Rural Tanzania," Working Papers 161, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
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