The Causal Effects of Ethnic Diversity: An Instrumental Variables Approach
Abstract
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.
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Date
2009-10-05Author
Ahlerup, Pelle
Keywords
economic development
ethnic diversity
instrumental variables
property rights
Publication type
report
ISSN
1403-2465
Series/Report no.
Working Papers in Economics
386
Language
eng