Within-Group Heterogeneity in a Multi-Ethnic Society

Título: Within-Group Heterogeneity in a Multi-Ethnic Society

Abstract: Is ethnic diversity good or bad for economic development? Most empirical studies
find corrosive effects. In this paper, I show that ethnic diversity need not spell poor
development outcomes—a history of within-group heterogeneity can turn ethnic diversity
into an advantage for long-run development. I collect new data from a natural experiment
regarding Peru’s colonial history: the forced resettlement of native populations in the 16th
century. This intervention forced together various ethnic groups into new jurisdictions.
In those jurisdictions where colonial officials concentrated individuals with a history
of within-group heterogeneity, who, prior to colonization, worked in complementary
climates of the Andes, ethnic diversity results in systematically lower costs and may even
become advantageous. Neither precolonial groups’ political complexity nor their degree
of economic development explain this result. The transmission of prosocial behavior
is one likely channel. I also find evidence consistent with a positive role of economic
complementarities between ethnic groups.

Speaker: Miriam Artiles (PUC)