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Fractionalization and Inter-Group Differences

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  • Jo Thori Lind

Abstract

Fractionalization has been shown to have a detrimental effect on growth, public goods provision, and redistribution. The conventional measure of fractionalization is the Herfindahl index, which calculates the probability that two persons drawn at random belong to different groups. This measure implicitly assumes that all groups are equally distant. In this paper, I argue that a more appropriate measure of fractionalization should take into account that some groups are more different than others, so we need a measure of groups distance. We should then measure fractionalization as the average distance between every citizen, or equivalently the average distance between groups weighted by group size. I present a simple method to estimate these distances from opinion survey data by regressing stated opinions on indicator variables from group and a set of control variables. The coefficients on the group variables can then be interpreted as measures of distance. Finally, I apply the method to US data and show that we get more reasonable measures of fractionalization. Copyright 2007 Blackwell Publishing Ltd..

Suggested Citation

  • Jo Thori Lind, 2007. "Fractionalization and Inter-Group Differences," Kyklos, Wiley Blackwell, vol. 60(1), pages 123-139, February.
  • Handle: RePEc:bla:kyklos:v:60:y:2007:i:1:p:123-139
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    References listed on IDEAS

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    1. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2009. "Cultural Biases in Economic Exchange?," The Quarterly Journal of Economics, Oxford University Press, vol. 124(3), pages 1095-1131.
    2. Enrico Spolaore & Romain Wacziarg, 2009. "The Diffusion of Development," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 469-529.
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    Cited by:

    1. Jo Thori Lind & Karl Moene, 2011. "Miserly Developments," Journal of Development Studies, Taylor & Francis Journals, vol. 47(9), pages 1332-1352, June.
    2. Cole, Matthew A. & Elliott, Robert J.R. & Khemmarat, Khemrutai, 2013. "Local exposure to toxic releases: Examining the role of ethnic fractionalization and polarisation," Ecological Economics, Elsevier, vol. 93(C), pages 249-259.
    3. Philipp Kolo, 2012. "Measuring a New Aspect of Ethnicity - The Appropriate Diversity Index," Ibero America Institute for Econ. Research (IAI) Discussion Papers 221, Ibero-America Institute for Economic Research.

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