Ethnic diversity and economic performance: An empirical investigation using survey data

This empirical study is based on nationally representative cross-sectional survey data gathered to investigate the effect of ethnic diversity on individual and household economic performance in Bosnia and Herzegovina (BiH). The complexity of this relationship in the context of this post-conflict country is addressed and investigated by estimating models in which ethnic diversity affects personal and family incomes. The 1992-1995 conflict was ethnically characterized, and harmful for ethnic diversity. Yet, two decades later, we find positive economic consequences of ethnic diversity for individuals and households. After controlling for other influences, the authors estimate that both personal and family incomes are around 10% higher in ethnically diverse than in ethnically homogenous areas. A corollary is that policy makers in this post-conflict country, and in similar environments elsewhere, should take into consideration the economic costs of policies supporting ethnic homogeneity over diversity.