Working Paper: NBER ID: w14335
Authors: Kaivan Munshi; Mark Rosenzweig
Abstract: Parochial politics is typically associated with poor leadership and low levels of public good provision. This paper explores the possibility that community involvement in politics need not necessarily worsen governance and, indeed, can be efficiency-enhancing when the context is appropriate. Complementing the new literature on the role of community networks in solving market problems, we test the hypothesis that strong traditional social institutions can discipline the leaders they put forward, successfully substituting for secular political institutions when they are ineffective. Using new data on Indian local governments at the ward level over multiple terms, and exploiting the randomized election reservation system, we find that the presence of a numerically dominant sub-caste (caste equilibrium) is associated with the selection of leaders with superior observed characteristics and with greater public good provision. This improvement in leadership competence occurs without apparently diminishing leaders' responsiveness to their constituency.
Keywords: Caste; Local Governance; Public Goods; Political Economy
JEL Codes: D72; H1; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| presence of a dominant caste (P13) | improved leadership competence (M54) |
| presence of a dominant caste (P13) | greater public goods provision (H49) |
| dominant caste presence (caste equilibrium) (C62) | selection of leaders with superior characteristics (D73) |
| dominant caste presence (caste equilibrium) (C62) | positive effect on governance outcomes (G38) |
| caste equilibrium (D50) | leaders align choices with median voter preferences (D79) |
| caste equilibrium (D50) | misalignment with overall electorate interests (D72) |
| gender of the leader (J16) | public goods allocation (H40) |
| female leaders (J16) | higher competence in resource allocation (D61) |