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Nation Formation and Genetic Diversity

  • Desmet, Klaus
  • Le Breton, Michel
  • Ortuno-Ortin, Ignacio

This paper presents a model of nation formation in which culturally heterogeneous agents vote on the optimal level of public spending. Larger nations benefit from increasing returns in the provision of public goods, but bear the costs of greater cultural heterogeneity. This tradeoff induces agents' preferences over different geographical configurations, thus determining the likelihood of secession and unification. We provide empirical support for choosing genetic distances as a proxy of cultural heterogeneity. By using data on genetic distances, we examine the stability of the current map of Europe and identify the regions prone to secession and the countries that are more likely to merge. Our framework is further applied to estimate the welfare gains from European Union membership.

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Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 133.

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Date of creation: Sep 2006
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Handle: RePEc:ide:wpaper:6450
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  1. Alesina, Alberto & Spolaore, Enrico, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1027-56, November.
  2. Breton, M. le & Weber, S., 1992. "Stability of Coalition Structures and the Principle of Optimal Partitioning," Papers 93-6, York (Canada) - Department of Economics.
  3. Enrico Spolaore & Romain Wacziarg, 2002. "Borders and Growth," NBER Working Papers 9223, National Bureau of Economic Research, Inc.
  4. Andrés Romeu & M. Dolores Collado & Ignacio Ortuño Ortín, 2006. "Vertical Transmission Of Consumption Behavior And The Distribution Of Surnames," Working Papers. Serie AD 2006-09, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  5. Tayfun Sönmez & Suryapratim Banerjee & Hideo Konishi, 2001. "Core in a simple coalition formation game," Social Choice and Welfare, Springer, vol. 18(1), pages 135-153.
  6. Bolton, Patrick & Roland, Gerard, 1997. "The Breakup of Nations: A Political Economy Analysis," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1057-90, November.
  7. Giuliano, Paola & Spilimbergo, Antonio & Tonon, Giovanni, 2006. "Genetic, Cultural and Geographical Distances," CEPR Discussion Papers 5807, C.E.P.R. Discussion Papers.
  8. John Y. Campbell, 1998. "Asset Prices, Consumption, and the Business Cycle," NBER Working Papers 6485, National Bureau of Economic Research, Inc.
  9. Desmet, Klaus & Ortuño-Ortín, Ignacio & Weber, Shlomo, 2005. "Peripheral Diversity and Redistribution," CEPR Discussion Papers 5112, C.E.P.R. Discussion Papers.
  10. Spolaore, Enrico & Wacziarg, Romain, 2006. "The Diffusion of Development," CEPR Discussion Papers 5630, C.E.P.R. Discussion Papers.
  11. William Easterly & Alberto Alesina & Janina Matuszeski, 2006. "Artificial States," Working Papers 100, Center for Global Development.
  12. Milchtaich, Igal & Winter, Eyal, 2002. "Stability and Segregation in Group Formation," Games and Economic Behavior, Elsevier, vol. 38(2), pages 318-346, February.
  13. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2005. "Cultural Biases in Economic Exchange," 2005 Meeting Papers 234, Society for Economic Dynamics.
  14. Stefano G. Athanasoulis & Robert J. Shiller, 1999. "World Income Components: Measuring and Exploiting Risk-Sharing Opportunities," Cowles Foundation Discussion Papers 1239, Cowles Foundation for Research in Economics, Yale University.
  15. Bogomolnaia, Anna & Jackson, Matthew O., 2002. "The Stability of Hedonic Coalition Structures," Games and Economic Behavior, Elsevier, vol. 38(2), pages 201-230, February.
  16. Ginsburgh, Victor & Ortuño-Ortín, Ignacio & Weber, Shlomo, 2005. "Disenfranchisement in Linguistically Diverse Societies: The Case of the European Union," CEPR Discussion Papers 4875, C.E.P.R. Discussion Papers.
  17. Friend, Irwin & Blume, Marshall E, 1975. "The Demand for Risky Assets," American Economic Review, American Economic Association, vol. 65(5), pages 900-922, December.
  18. repec:rus:hseeco:71039 is not listed on IDEAS
  19. Dreze, J H & Greenberg, J, 1980. "Hedonic Coalitions: Optimality and Stability," Econometrica, Econometric Society, vol. 48(4), pages 987-1003, May.
  20. Gans, Joshua S. & Smart, Michael, 1996. "Majority voting with single-crossing preferences," Journal of Public Economics, Elsevier, vol. 59(2), pages 219-237, February.
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