Discussion Paper

No. 2017-57 | August 23, 2017
Ethnic diversity and economic performance – an empirical investigation using survey data


This empirical study is based on nationally representative cross-sectional survey data gathered to investigate the effect of ethnic diversity on individual and household economic performance in Bosnia and Herzegovina (BiH). The complexity of this relationship in the context of this post-conflict country is addressed and investigated by estimating models in which ethnic diversity affects personal and family incomes. The 1992–1995 conflict was ethnically characterized, and harmful for ethnic diversity. Yet, two decades later, we find positive economic consequences of ethnic diversity for individuals and households. After controlling for other influences, the authors estimate that both personal and family incomes are around 10% higher in ethnically diverse than in ethnically homogenous areas. A corollary is that policy makers in this post-conflict country, and in similar environments elsewhere, should take into consideration the economic costs of policies supporting ethnic homogeneity over diversity.

JEL Classification:

D00, D10, D31


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Cite As

Adnan Efendic and Geoff Pugh (2017). Ethnic diversity and economic performance – an empirical investigation using survey data. Economics Discussion Papers, No 2017-57, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2017-57

Comments and Questions

Anonymous - Recommendation
August 30, 2017 - 12:52

This paper focuses on the personal distribution of income. To acquire a macroeconomic flavor too, it should devote a paragraph or two on the role of religious identity in the conflict in BiH. National identity there was identified with religious identity, and national homogeneity implies thereby religious homogeneity, which according ...[more]

... to the sites mentioned below, may be fostering growth...


Anonymous - Response
September 07, 2017 - 09:17

Dear colleague,
thank you for this useful comment. We fully agree with your suggestion. We will integrate this discussion and references during the revision process when we get referee reports.
Adnan Efendic