Journal of Public Economics 89 (2005) 2325–2368 www.elsevier.com/locate/econbase Ethnic diversity, social sanctions, and public goods in Kenya Edward Miguela,*, Mary Kay Gugertyb a549 Evans Hall, #3880, Department of Economics, University of California, Berkeley, CA 94720-3880, United States bDaniel J. Evans School of Public Affairs, University of Washington, WA, United States Received 6 January 2003; received in revised form 12 August 2004; accepted 9 September 2004 Available online 6 November 2004 Abstract This paper examines ethnic diversity and local public goods in rural western Kenya. The identification strategy relies on the stable historically determined patterns of ethnic land settlement. Ethnic diversity is associated with lower primary school funding and worse school facilities, and there is suggestive evidence that it leads to poor water well maintenance. The theoretical model illustrates how inability to impose social sanctions in diverse communities leads to collective action failures, and we find that school committees in diverse areas do impose fewer sanctions on defaulting parents. We relate these results to the literature on social capital and economic development and discuss implications for decentralization in less developed countries. D 2004 Elsevier B.V. All rights reserved. JEL classification: D71; H41; O12 Keywords: Local public goods; Ethnic diversity; Collective action; Africa 1. Introduction Well-known cross-country empirical research indicates that ethnically diverse societies have slower economic growth and are more prone to corruption and political instability * Corresponding author. Tel.: +1 510 642 7162; fax: +1 510 642 6615. E-mail address:
[email protected] (E. Miguel). 0047-2727/$ - see front matter D 2004 Elsevier B.V.