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Public goods and ethnic diversity: evidence from deforestation in Indonesia

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  • Alberto Alesina
  • Caterina Gennaioli
  • Stefania Lovo

Abstract

This paper shows that the level of deforestation in Indonesia is positively related to the degree of ethnic fractionalization at the district level. To identify a casual relation we exploit the exogenous timing of variations in the level of ethnic heterogeneity due to the creation of new jurisdictions. We provide evidence consistent with a lower control of politicians, through electoral punishment, in more ethnically fragmented districts. Our results bring a new perspective on the political economy of deforestation. They are consistent with the literature of (under) provision of public goods and social capital in ethnically diverse societies and suggest that when the underlying communities are ethnically fractionalized, decentralization can reduce deforestation.

Suggested Citation

  • Alberto Alesina & Caterina Gennaioli & Stefania Lovo, 2015. "Public goods and ethnic diversity: evidence from deforestation in Indonesia," GRI Working Papers 166, Grantham Research Institute on Climate Change and the Environment.
  • Handle: RePEc:lsg:lsgwps:wp166
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    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • L73 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Forest Products
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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