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Stability of Nations and Genetic Diversity

  • Klaus Desmet

    ()

    (Universidad Carlos III, Getafe (Madrid), Spain, and CEPR)

  • Michel Le Breton

    (Universite de Toulouse I, GREMAQ and IDEI, Toulouse, France)

  • Ignacio Ortuno-Ortin

    ()

    (Universidad Carlos III, Getafe (Madrid), Spain)

  • Shlomo Weber

    ()

    (Southern Methodist University, Dallas, USA, CORE, Catholic University of Louvain, Louvain-la-Neuve, Belgium, and CEPR)

This paper presents a model of nations where 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 or unification. We provide empirical support for choosing genetic distances as a proxy of cultural heterogeneity and by using data on genetic distances, we examine the stability of the current map of Europe. We then identify the regions prone to secession and the countries that are more likely to merge. Furthermore, we estimate the welfare gains from European Union membership.

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File URL: http://www.iset.ge/files/003-08.pdf
File Function: First version, 2008
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Paper provided by International School of Economics at TSU, Tbilisi, Republic of Georgia in its series Working Papers with number 003-08.

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Length: 34 pages
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:tbs:wpaper:08-003
Contact details of provider: Web page: http://www.iset.ge/

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  1. GINSBURGH, Victor & ORTUNO-ORTIN, Ignatio & WEBER, Shlomo, . "Disenfranchisement in linguistically diverse societies: the case of the European Union," CORE Discussion Papers RP -1773, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Enrico Spolaore & Romain Wacziarg, 2006. "The Diffusion of Development," NBER Working Papers 12153, National Bureau of Economic Research, Inc.
  3. Oded Galor & Quamrul Ashraf, 2007. "Cultural Assimilation, Cultural Diffusion and the Origin of the Wealth of Nations," Working Papers 2007-3, Brown University, Department of Economics.
  4. Alberto Alesina & William Easterly & Janina Matuszeski, 2006. "Artificial States," NBER Working Papers 12328, National Bureau of Economic Research, Inc.
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  8. Alberto Alesina & Reza Baqir & Caroline Hoxby, 2004. "Political Jurisdictions in Heterogeneous Communities," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 348-396, April.
  9. Bogomolnaia, Anna & Jackson, Matthew O., 2002. "The Stability of Hedonic Coalition Structures," Games and Economic Behavior, Elsevier, vol. 38(2), pages 201-230, February.
  10. Anna Bogomolnaia & Michel Breton & Alexei Savvateev & Shlomo Weber, 2007. "Stability under unanimous consent, free mobility and core," International Journal of Game Theory, Springer, vol. 35(2), pages 185-204, January.
  11. Friend, Irwin & Blume, Marshall E, 1975. "The Demand for Risky Assets," American Economic Review, American Economic Association, vol. 65(5), pages 900-922, December.
  12. Desmet, Klaus & Ortuño-Ortín, Ignacio & Weber, Shlomo, 2005. "Peripheral Diversity and Redistribution," CEPR Discussion Papers 5112, C.E.P.R. Discussion Papers.
  13. Giuliano, Paola & Spilimbergo, Antonio & Tonon, Giovanni, 2006. "Genetic, Cultural and Geographical Distances," CEPR Discussion Papers 5807, C.E.P.R. Discussion Papers.
  14. 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.
  15. Suryapratim Banerjee & Hideo Konishi & Tayfun Sonmez, 1999. "Core in a Simple Coalition Formation Game," Boston College Working Papers in Economics 449, Boston College Department of Economics.
  16. Milchtaich, Igal & Winter, Eyal, 2002. "Stability and Segregation in Group Formation," Games and Economic Behavior, Elsevier, vol. 38(2), pages 318-346, February.
  17. Gans, Joshua S. & Smart, Michael, 1996. "Majority voting with single-crossing preferences," Journal of Public Economics, Elsevier, vol. 59(2), pages 219-237, February.
  18. Bolton, Patrick & Roland, Gérard, 1995. "The Break up of Nations: A Political Economy Analysis," CEPR Discussion Papers 1225, C.E.P.R. Discussion Papers.
  19. Jehiel, Philippe & Scotchmer, Suzanne, 2001. "Constitutional Rules of Exclusion in Jurisdiction Formation," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 393-413, April.
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