Countries with a high degree of ethno-linguistic diversity are often associated with underdevelopment and the under-provision of public goods. However, the existing literature, which is at the cross country level, fails to take into account the effective contact between the different ethnic groups. For a given level of ethno-linguistic diversity, we would expect the outcomes to differ depending on whether the different groups are interacting locally or not. Our premise is that the potential for interaction between people of different groups depends on the spatial distribution of diversity. The degree of potential contact will then either mitigate or reinforce the antagonism that individuals experience towards other groups in the society at large.
This in turn would affect the individual valuation of public goods and hence the provision of such public goods.
We propose to construct a theoretical model of contact between groups that yields novel micro-founded measures of local diversity and then empirically explore the relationship of diversity and the provision of public goods. The aim of the project would be to not only improve our understanding of the role of ethnic diversity in explaining public goods provision, but also provide policymakers with relevant information on which geographic regions and ethnic groups need more direct and focused policy intervention. In particular, from the policy point of view, we would be able to identify at the local level vulnerable regions in the world, which are likely to suffer frompoor health and educational outcomes, due to worse provisioning of public goods.