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The Causal Effects of Ethnic Diversity: An Instrumental Variables Approach

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  • Ahlerup, Pelle

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

Ethnic diversity is endogenous to economic development in the long run. Yet the standard approach in economic research is to treat ethnic diversity as an exogenous factor. By identifying instruments for ethnic diversity, we correct this misspeci ca- tion and establish that ethnic diversity has an exogenous in uence on income levels, economic growth, corruption, and provision of public goods. Earlier results based on OLS estimations may have underestimated the negative e¤ects of high levels of ethnic diversity.

Suggested Citation

  • Ahlerup, Pelle, 2009. "The Causal Effects of Ethnic Diversity: An Instrumental Variables Approach," Working Papers in Economics 386, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0386
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    File URL: http://hdl.handle.net/2077/21201
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    References listed on IDEAS

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    1. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LP, vol. 3(1), pages 1-31, March.
    2. Angus Deaton, 2009. "Instruments of development: Randomization in the tropics, and the search for the elusive keys to economic development," Working Papers 1128, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
    3. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
    4. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
    5. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, September.
    6. Pelle Ahlerup & Ola Olsson, 2012. "The roots of ethnic diversity," Journal of Economic Growth, Springer, vol. 17(2), pages 71-102, June.
    7. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    8. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    9. Albouy, David, 2006. "The Colonial Origins of Comparative Development: An Investigation of the Settler Mortality Data," Center for International and Development Economics Research, Working Paper Series qt8kt576x8, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
    10. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
    11. Fearon, James D, 2003. "Ethnic and Cultural Diversity by Country," Journal of Economic Growth, Springer, vol. 8(2), pages 195-222, June.
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    Citations

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    Cited by:

    1. Mahzab, Moogdho & Atiq, Mohsina & Devdariani, Nino, 2013. "Comparative Analysis of Ethnic Diversity Measures on Provisioning of Basic Public Goods: Cross Country Assessment," MPRA Paper 38511, University Library of Munich, Germany.
    2. Gomes, Joseph, 2014. "The health costs of ethnic distance: evidence from Sub-Saharan Africa," ISER Working Paper Series 2014-33, Institute for Social and Economic Research.
    3. Pelle Ahlerup & Ola Olsson, 2012. "The roots of ethnic diversity," Journal of Economic Growth, Springer, vol. 17(2), pages 71-102, June.
    4. Awaworyi Churchill, Sefa & Smyth, Russell, 2017. "Ethnic Diversity and Poverty," World Development, Elsevier, vol. 95(C), pages 285-302.
    5. repec:bla:ecorec:v:93:y:2017:i:300:p:112-141 is not listed on IDEAS
    6. repec:spr:soinre:v:134:y:2017:i:3:d:10.1007_s11205-016-1454-7 is not listed on IDEAS

    More about this item

    Keywords

    economic development; ethnic diversity; instrumental variables; property rights;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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