What is this thesis in simple terms?

Societies split among many ethnic groups find it harder to provide shared facilities like schools and roads.

Is diversity always harmful?

No. It can bring innovation and productivity gains, and good institutions reduce negative effects.

Ethnic Diversity and Public Goods

📈 Economics By CampusDown Wiki Editorial Team Last updated October 27, 2026

The ethnic diversity and public goods thesis holds that the more a society is divided among ethnic, racial or linguistic groups, the harder it is to jointly provide public goods such as schools, roads and welfare. It became widely known through Easterly and Levine (1997) and Alesina and colleagues (1999).

Contents

1. Concept and evidence
2. Mechanisms
3. Trust and counterarguments
4. FAQ
5. References

Concept and evidence

Easterly and Levine (1997) showed ethnically divided African countries supplied fewer growth-enhancing policies and public goods. Alesina, Baqir and Easterly (1999) found US cities with more racial diversity spend less on schools and roads, and Alesina and Glaeser (2004) linked this to the smaller US welfare state.

Mechanisms

Explanations include reluctance to fund other groups, differing preferences and difficulty cooperating across groups. Miguel and Gugerty (2005) found diverse Kenyan communities struggled to sanction non-contributors, and Habyarimana and colleagues (2007) showed in Uganda that in-group enforcement is key, connecting to public goods game research.

Trust and counterarguments

Putnam (2007) found lower trust and social capital in diverse US areas in the short run, though new identities may overcome this. Group threat theory is also relevant. Alesina and La Ferrara (2005) noted diversity can raise innovation and productivity, with effects depending on institutions and income.

FAQ

What is this thesis in simple terms?: Societies split among many ethnic groups find it harder to provide shared facilities like schools and roads.
Is diversity always harmful?: No. It can bring innovation and productivity gains, and good institutions reduce negative effects.

Sources reviewed: 2026-10-26

References

Easterly, W., & Levine, R. (1997). Africa's growth tragedy: Policies and ethnic divisions. The Quarterly Journal of Economics, 112(4), 1203–1250. Ethnic divisions and Africa's growth.
Alesina, A., Baqir, R., & Easterly, W. (1999). Public goods and ethnic divisions. The Quarterly Journal of Economics, 114(4), 1243–1284. Diversity and lower public goods in US cities.
Alesina, A., & La Ferrara, E. (2005). Ethnic diversity and economic performance. Journal of Economic Literature, 43(3), 762–800. Reviews costs and benefits of diversity.
Miguel, E., & Gugerty, M. K. (2005). Ethnic diversity, social sanctions, and public goods in Kenya. Journal of Public Economics, 89(11–12), 2325–2368. Weaker social sanctions in diverse Kenyan communities.
Habyarimana, J., Humphreys, M., Posner, D. N., & Weinstein, J. M. (2007). Why does ethnic diversity undermine public goods provision? American Political Science Review, 101(4), 709–725. Experiments comparing mechanisms.
Putnam, R. D. (2007). E pluribus unum: Diversity and community in the twenty-first century. Scandinavian Political Studies, 30(2), 137–174. Diversity and short-run declines in trust.
Alesina, A., & Glaeser, E. L. (2004). Fighting poverty in the US and Europe: A world of difference. Oxford University Press. Diversity and the smaller US welfare state.

Reports and materials that use this theory (Korean)

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Public goodWhat a public good is in economics, non-rivalry and non-excludability, examples, the free-rider problem and market failure, the four types of goods, and the tragedy of the commons.📈 Economics Social CapitalSocial capital explained: Bourdieu's forms of capital, Coleman's norms and closure, Putnam's civic engagement and Bowling Alone, bonding, bridging and linking capital, Granovetter's weak ties, measurement and critiques.👥 Sociology Group Threat TheoryWhat group threat theory is: majority groups become more prejudiced and exclusionary when minority groups grow or competition is perceived. Covers classic statements, empirical research and the tension with contact theory.👥 Sociology Public Goods GameWhat the public goods game is: players contribute to a pool that is multiplied and shared. Covers rules and predictions, declining contributions, conditional cooperation, altruistic and antisocial punishment, and intuition and cooperation.📈 Economics

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This article was last updated on October 27, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.