Public goods and diversity in democracies and non-democracies

Abstract

This paper analyzes how ethnic diversity affects the provision of public goods in democratic and non-democratic societies when political parties compete for voter support by offering a mix of private and public goods. Our model implies that increasing diversity that leads to more heterogeneous preferences for public goods decreases the provision of public goods in democracies, where political power is distributed equally among citizens, while there is a weaker or no effect in non-democracies, where political power is distributed unequally among citizens. When measuring diversity by ethnic fractionalization and public good provision by either levels of government expenses, expenditures on health, or life expectancy, we indeed observe a negative association between diversity and the provision of public goods in democracies but no or only a weak association in non-democracies.