NATIONAL BUREAU OF ECONOMIC RESEARCH
School of Business and Management
Queen Mary University of London
Mile End Road
NBER Working Papers and Publications
|September 2014||Public Goods and Ethnic Diversity: Evidence from Deforestation in Indonesia|
with Alberto Alesina, Stefania Lovo: w20504
This paper shows that the level of deforestation in Indonesia is positively related to the degree of ethnic fractionalization at the district level. To identify a casual relation we exploit the exogenous timing of variations in the level of ethnic heterogeneity due to the creation of new jurisdictions. We provide evidence consistent with a lower control of politicians, through electoral punishment, in more ethnically fragmented districts. Our results bring a new perspective on the political economy of deforestation. They are consistent with the literature on (under) provision of public goods and social capital in ethnically diverse societies and suggest that when the underlying communities are ethnically fractionalized decentralisation can reduce deforestation by delegating powers to more ...