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Minority Status and Investment: Evidence from Natural and Lab Experiments in Bosnia and Herzegovina1

  • Vera Mironova

    ()

    (University of Maryland)

  • Egor Lazarev

    ()

    (Columbia University)

Registered author(s):

    This study explores how minority status influences individual decisions about investment in a post-conflict society. The study is based on multiple sources of evidence from Bosnia and Herzegovina. First, we exploit an exogenous imposition of minority and majority positions by an asif random adjustment of an administrative boundary and analyze household and business surveys. Second, we run a “lab-in-the field” experiment. The analysis shows that both actual and experimentally induced minority statuses are associated with lower levels of investment. Evidence suggests the perception of discrimination by the government, and not actual discrimination, as the plausible cause of such behavior. Several implications follow: emergence and persistence of segregated ethnic businesses, underinvestment and a basis for horizontal inter-group inequality that could increase the probability of a conflict.

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    File URL: http://www.hicn.org/wordpress/wp-content/uploads/2012/06/HiCN-WP-162.pdf
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    Paper provided by Households in Conflict Network in its series HiCN Working Papers with number 162.

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    Length: 50 pages
    Date of creation: Dec 2013
    Date of revision:
    Handle: RePEc:hic:wpaper:162
    Contact details of provider: Web page: http://www.hicn.org

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    1. Suresh de Mel & David McKenzie & Christopher Woodruff, 2008. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," The Quarterly Journal of Economics, MIT Press, vol. 123(4), pages 1329-1372, November.
    2. Alberto Alesina & Ekaterina Zhuravskaya, 2008. "Segregation and the Quality of Government in a Cross-Section of Countries," NBER Working Papers 14316, National Bureau of Economic Research, Inc.
    3. Easterly, W & Levine, R, 1996. "Africa's Growth Tragedy : Policies and Ethnic Divisions," Papers 536, Harvard - Institute for International Development.
    4. Dean S. Karlan, 2005. "Using Experimental Economics to Measure Social Capital and Predict Financial Decisions," Working Papers 182, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    5. Arun G. Chandrasekhar & Cynthia Kinnan & Horacio Larreguy, 2014. "Social Networks as Contract Enforcement: Evidence from a Lab Experiment in the Field," NBER Working Papers 20259, National Bureau of Economic Research, Inc.
    6. Miguel, Edward & Gugerty, Mary Kay, 2005. "Ethnic diversity, social sanctions, and public goods in Kenya," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2325-2368, December.
    7. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
    8. Charness, Gary B & Cobo-Reyes, Ramón & Jiménez, Natalia, 2007. "An investment game with third-party intervention," University of California at Santa Barbara, Economics Working Paper Series qt7qg338r3, Department of Economics, UC Santa Barbara.
    9. Habyarimana, James P. & Humphreys, Macartan & Posner, Daniel N. & Weinstein, Jeremy, 2006. "Why Does Ethnic Diversity Undermine Public Goods Provision? An Experimental Approach," IZA Discussion Papers 2272, Institute for the Study of Labor (IZA).
    10. Joan Esteban & Debraj Ray, 2011. "Linking Conflict to Inequality and Polarization," American Economic Review, American Economic Association, vol. 101(4), pages 1345-74, June.
    11. Maarten J. Voors & Eleonora E. M. Nillesen & Philip Verwimp & Erwin H. Bulte & Robert Lensink & Daan P. Van Soest, 2012. "Violent Conflict and Behavior: A Field Experiment in Burundi," American Economic Review, American Economic Association, vol. 102(2), pages 941-64, April.
    12. Joan Esteban & Laura Mayoral and Debraj Ray, 2010. "Ethnicity And Conflict: An Empirical Study," Working Papers 482, Barcelona Graduate School of Economics.
    13. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
    14. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    15. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, volume 1, number 5474.
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