Title: Ethnic Inequality
Author: Alberto Alesina, Stelio Michalopoulos and Elias Papaioannou
Scope: 4 stars
Readability: 2 stars
My personal rating: 4 stars
See more on my book rating system.

Topic of Article

The authors explore the reasons for ethnic inequality in Sub-Saharan Africa.

Key Take-aways

• While many people think of the peoples of Sub-Saharan Africa was more or less the same, the region is very ethnically diverse.
• Ethnic inequality within the region is also quite high.
• This inequality is largely caused by differences in geography.
• There is no evidence these inequalities were created by European colonists or government institutions.

Important Quotes from Book

This study explores the consequences and origins of between-ethnicity economic inequality both across and within countries. First, combining satellite images of nighttime luminosity with the historical homelands of ethnolinguistic groups we construct measures of ethnic inequality for a large sample of countries and show that the latter is strongly inversely related to comparative development. Second, differences in geographic endowments across ethnic homelands explain a sizable portion of ethnic inequality contributing to its persistence over time. Third, exploiting across-district within-African countries variation using individual-level data on ethnic identification and well-being from the Afro-barometer Surveys we find that between ethnic-group inequality is systematically linked to regional under-development.

This paper puts forward and tests an alternative conjecture that focuses on the inter-section of ethnic diversity and inequality. Our thesis is that what mostly matters for development are economic differences between ethnic groups coexisting in the same country, rather than the degree of fractionalization per se or income inequality conventionally measured (i.e., independent of ethnicity). Inequality in income along ethnic lines is likely to lead to political inequality, increase animosity, and lead to discriminatory policies of one (or more) groups against the others. Furthermore, differences in preferences across both ethnic and income lines may lead to inadequate public goods provision, as groups’ ideal allocation of public goods will be quite distant. Moreover, the presence of an economically dominant ethnic minority may lower support for democracy and free-market institutions, as the majority of the population usually feels that the benefits of capitalism go to just a handful of ethnic groups.

Second, we document a strong negative association between ethnic inequality and real GDP per capita at the country level.

Ethnic inequality tends to go in tandem with segregation. There is little evidence linking contemporary differences in ethnic inequality to the legal tradition, the conditions that European settlers faced at the time of colonization the share of Europeans in the population, the inclusiveness of early institutions, state history, and borders’ design.