Ethnic Geography: Measurement and Evidence

The effects of ethnic geography, i.e., the distribution of ethnic groups across space, on economic, political and social outcomes are not well understood. We develop a novel index of ethnic segregation that takes both ethnic and spatial distances between individuals into account. Importantly, we can decompose this index into indices of spatial dispersion, generalized ethnic fractionalization, and the alignment of spatial and ethnic distances. We use ethnographic maps, spatially disaggregated population data, and language trees to compute these four indices for around 160 countries. We apply these indices to study the relation between ethnic geography and current economic, political and social outcomes. We document that country level quality of government, income and trust increase with the alignment component of segregation, i.e., with the ratio between the country’s actual segregation and the segregation it would have if ethnic groups were represented in each location with population shares identical to their country-level population share. Hence, all else equal, countries where ethnically diverse individuals live farther apart tend to perform better.