Ethnolinguistic Diversity: Origins and Implications
Abstract
This research examines theoretically and empirically the economic origins of ethnolinguistic fractionalization. The empirical analysis constructs detailed data on the distribution of land quality across regions and countries, and shows that variation in land quality has contributed significantly to the emergence and persistence of ethnic diversity. The evidence supports the theoretical analysis, according to which heterogeneous land endowments generated region specific human capital, limiting population mobility and leading to the formation of localized ethnicities and languages. The research contributes to the understanding of the emergence of ethnicities and their spatial distribution and offers a distinction between the natural, geographically driven, versus the artificial, man-made, components of contemporary ethnic diversity. An application of the proposed approach casts doubt on the influential findings that ethnic diversity has significant adverse effects on economic outcomes. Instrumenting ethnic diversity using measures of variation in land quality suggests that its effect on contemporary development is not significantly different from zero.
