The Causal Effects of Ethnic Diversity: An Instrumental Variables Approach
No 386, Working Papers in Economics from University of Gothenburg, Department of Economics
Ethnic diversity is endogenous to economic development in the long run. Yet the standard approach in economic research is to treat ethnic diversity as an exogenous factor. By identifying instruments for ethnic diversity, we correct this misspeci ca- tion and establish that ethnic diversity has an exogenous in uence on income levels, economic growth, corruption, and provision of public goods. Earlier results based on OLS estimations may have underestimated the negative e¤ects of high levels of ethnic diversity.
Keywords: economic development; ethnic diversity; instrumental variables; property rights (search for similar items in EconPapers)
JEL-codes: O11 O43 P51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-evo and nep-ure
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