Thursday, December 18, 2014

Does ethnic diversity decrease economic interactions? Evidence from exchange networks in rural Gambia

As the end of the year is approaching, a little summary of my research work during 2014. 

This year I spent a lot of time in the field collecting the data for the follow-up survey of the Gambia Networks Project. We are currently cleaning the new data and looking forward to have a panel data of economic networks of our beloved villages. 

In the meantime, I kept working on the papers that use the baseline data. In a new working paper, joint with my Maestro Jean-Louis Arcand, we present evidence that ethnic diversity does not reduce economic interaction in rural Gambian villages:   

Using a unique dataset collected in 59 rural Gambian villages, we study how ethnic heterogeneity is related to the structure of four economic exchange networks: land, labor, inputs and credit. We find that different measures of village-level ethnic fragmentation are mostly uncorrelated with network structure. At a more disaggregated level, household heads belonging to ethnic minorities are not less central than those from the predominant ethnicity in any of the networks and, at the dyadic level, the fact that two households share ethnicity is not an economically significant predictor of link formation. Our results indicate that, in the particular setting of our study, the structure of the exchange networks is better defined by other variables than ethnicity, and that ethnic heterogeneity is unlikely to be a driver for sub-optimal economic exchanges. We argue that our findings can be interpreted in a causal way as the current distribution of ethnic groups in rural Gambia is largely influenced by specific historical features of the British colonial administration. Moreover, the network structure of our data allow us to include fixed effects at different levels as well as to precisely measure kinship ties, a confounding variable often omitted in previous studies

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