Working Paper: NBER ID: w20504
Authors: Alberto Alesina; Caterina Gennaioli; Stefania Lovo
Abstract: 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 homogeneous communities.
Keywords: ethnic diversity; deforestation; Indonesia; public goods; political economy
JEL Codes: H00; O1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Ethnic fractionalization (J15) | Corruption (D73) |
| Corruption (D73) | Deforestation (Q23) |
| Ethnic fractionalization (J15) | Lower accountability for corrupt politicians (D73) |
| Lower accountability for corrupt politicians (D73) | Deforestation (Q23) |
| District splitting (H73) | Decrease in ethnic fractionalization (J15) |
| Ethnic fractionalization (J15) | Reduced capacity to coordinate against corrupt politicians (D73) |
| Decentralization (H77) | Varying effects on deforestation (Q23) |
| Ethnic fractionalization (J15) | Deforestation (Q23) |
| Decrease in ethnic fractionalization (J15) | Reduction in deforestation (Q23) |