Peripheral diversity: transfers versus public goods Articles uri icon

publication date

  • January 2017

start page

  • 1

end page

  • 37

international standard serial number (ISSN)

  • 0176-1714

electronic international standard serial number (EISSN)

  • 1432-217X

abstract

  • This paper advances the hypothesis that in societies that suffer from ethnolinguistic center-periphery tension it is harder to agree on public goods than on transfers. After micro-founding a new peripheral diversity index, it puts forth a simple theory in which the cost of public goods increases with peripheral ethnolinguistic diversity and tax compliance decreases with overall ethnolinguistic diversity. It then empirically explores the relation between public goods provision, transfers, peripheral diversity and overall diversity. Consistent with the theory, we find that higher levels of peripheral diversity are associated with less provision of public goods, but more transfers, whereas higher levels of overall diversity have a negative association with transfers. Public goods and transfers are therefore substitutes in their reaction to a change in peripheral diversity.

keywords

  • Peripheral ethnolinguistic diversity
    Public goods provision
    Peripheral diversity
    Transfers