Unity in Diversity? How Intergroup Contact Can Foster Nation Building∗ Samuel Bazziy Arya Gaduhz Alexander Rothenbergx Maisy Wong{ Boston University University of Arkansas RAND Corporation University of Pennsylvania and CEPR February 2018 Abstract Ethnic divisions complicate nation building, but little is known about how to mitigate these divisions. We use one of history’s largest resettlement programs to show how intergroup contact affects long-run integration. In the 1980s, the Indonesian government relocated two million migrants into hundreds of new communities to encourage interethnic mixing. Two decades later, more diverse communities exhibit deeper integration, as reflected in language use and intergroup marriage. Endogenous sor- ting across communities cannot explain these effects. Rather, initial conditions, including residential segregation, political and economic competition, and linguistic differences influence which diverse communities integrate. These findings contribute lessons for resettlement policy. JEL Classifications: D02, D71, J15, O15, R23 Keywords: Cultural Change, Diversity, Identity, Language, Migration, Nation Building ∗We thank Alberto Alesina, Oriana Bandiera, Toman Barsbai, Giorgio Chiovelli, Raquel Fernandez, Paola Giuliano, Dilip Mookherjee, Nathan Nunn, Daniele Paserman, Ben Olken, Imran Rasul and seminar participants at Boston University, George- town University, Harvard University, the Kiel Institute, McGill University, MIT, Notre Dame, University of Colorado Denver, University of Southern California, University of Toronto, Wellesley College, the Barcelona Graduate School Summer Forum, the 2017 DIAL Development Conference, the 2017 Midwest International Development Conference, the NBER Political Economy meeting, the Ninth International Migration and Development Conference, the 2016 Annual European Conference of ASREC, and the Northeast Universities Development Consortium 2016 Conference for helpful suggestions. Maisy Wong is grateful for financial support from the Research Sponsors Program of the Zell/Lurie Real Estate Center and the Wharton Global Initiatives program. A previous version of this paper circulated under the title “Unity in Diversity? Ethnicity, Migration, and Nation Building in Indonesia.” Jeremy Kirk, Gedeon Lim, JoonYup Park, and Xuequan Peng provided excellent research assistance. All errors remain ours. yDepartment of Economics. 270 Bay State Rd., Boston, MA 02215. Email: [email protected]. zSam M. Walton College of Business. Department of Economics. Business Building 402, Fayetteville, AR 72701-1201. Email: [email protected]. x1200 South Hayes St., Arlington, VA 22202-5050. Email: [email protected]. {Wharton Real Estate. 3620 Locust Walk, 1464 SHDH, Philadelphia, PA 19104-6302. Email: [email protected]. 1 [The] central challenge of modern, diversifying societies is to create a new, broader sense of ‘we’. —Robert Putnam, The 2006 Johan Skytte Prize Lecture 1 Introduction Uniting people from diverse cultures is a founding principle of many nation states.1 Throughout history, leaders have introduced policies to foster a national identity that would sustain an “imagined political community” in which citizens remain connected by shared history and values, despite never meeting one another (Anderson, 1983). However, with rising geographic mobility, there are concerns that gro- wing local diversity may encourage a narrower sense of “we” and undermine this nation-building ob- jective (Putnam, 2007).2 The recent refugee crisis has also stoked debate over how to design resettlement policies to facilitate the integration of diverse groups (Bansak et al., 2018). The key contribution of this paper is to show how local diversity influences integration and contri- butes to an intergenerational process of nation building. Social theorists offer competing views. Some argue that exposure to new cultures provokes backlash and may incite conflict (Blumer, 1958; Hunting- ton, 2004). Others posit that negative sentiments may dissipate as intergroup relationships develop over time with greater contact (Allport, 1954). Alternatively, diversity may engender social anomie or isola- tion, which limits integration (Alesina and La Ferrara, 2000; Algan et al., 2016). Empirically, however, it is difficult to identify whether contact strengthens intergroup relationships in the long run because (i) identities and social relationships change slowly and tend to be confounded with time trends, (ii) di- verse communities are often unstable due to tipping forces (Schelling, 1971), and (iii) persistent diversity is often confounded by favorable geography and endogenous sorting (Michalopoulos, 2012). We use a large-scale policy experiment in Indonesia to address these identification challenges. Indonesia’s Transmigration program, one of the largest resettlement efforts in history, provides an ideal setting to understand how intergroup contact can foster nation building. After independence, the government faced urgent pressures to forge an Indonesian identity that would unite diverse groups across the archipelago and overcome secessionist tendencies. Policymakers viewed resettlement as part of a broader effort to integrate more than 700 ethnolinguistic groups geographically segregated throug- hout history. From 1979 to 1988, the Transmigration program assigned two million voluntary migrants (hereafter, transmigrants) from the Inner Islands of Java and Bali to new settlements across the Outer Islands.3 Each settlement was endowed with the same public resources and included a mix of Inner and Outer Islanders with the goal of weakening salient ethnic divisions through contact. We exploit the haphazard assignment of transmigrants across settlements to isolate plausibly exo- genous, long-run variation in local diversity. Institutional and capacity constraints limited planners’ abilities to systematically assign transmigrants. Moreover, a lottery was used to distribute farm plots 1For example, “United in Diversity” is the motto for the European Union, E pluribus unum (out of many, one) for the United States, and “Unity in Diversity” for South Africa and Indonesia. There are numerous historical examples of efforts “to form French citizens” (Weber, 1976), “to make Italians” (Duggan, 2007), and to create “one kind of man, Indonesian” (Hoey, 2003). 2Alesina et al.(2017) and Miller(2012) discuss challenges of forging a shared identity within the European Union. More generally, migration pressures are growing among minorities within rich countries (see Frey, 2014, on the United States) and in newer migration corridors from poor to rich countries (Hanson and McIntosh, 2016). The U.S. is projected to become a majority minority nation by 2044 (Colby and Ortman, 2014) and the United Kingdom by 2066 (Coleman, 2010). 3The program had three goals: population redistribution, agricultural development, and nation building. In prior work (Bazzi et al., 2016), we investigate the agricultural productivity effects using a different empirical strategy than in the present study. 1 and assign housing to newly-arriving migrants. Imperfect land markets tied migrants to these initial plots, limiting ex-post sorting. Ultimately, the large scale of the program created nearly 900 communities along a continuum of policy-induced diversity. Using the 2000 Population Census, we show that even af- ter two decades, these communities exhibit significantly greater ethnic diversity and less within-village ethnic segregation than other villages in the Outer Islands.4 The persistence of many mixed Inner–Outer communities suggests that tipping did not neutralize the initial policy assignment. This allows us to study the effects of sustained interethnic contact in communities where local diversity did not arise as a result of endogenous sorting. We further address endogenous sorting by developing an instrumental variables strategy that le- verages the initial assignment. In particular, we instrument for the Inner-Island ethnic share in a village in 2000 using the initial stock of transmigrants assigned in the 1980s. Planners determined each settle- ment’s potential population size by assessing the carrying capacity of available land using soil attributes and topography. Conditional on these predetermined natural advantages (and hence, on potential po- pulation), the larger the initial transmigrant stock, the greater the Inner-Island ethnic share today. We show that this strategy helps rule out endogenous ex-ante assignment and ex-post sorting of migrants to places with tolerant natives. Our key measure of integration is the choice of language used at home, as reported in a 2006 hou- sehold survey. Language is broadly seen across the globe as the most critical component of national identity (Pew Research Center, 2017). Indeed, policymakers view the national language, Bahasa Indone- sia or Indonesian, as synonymous with Indonesian identity, widely promoting its use across economic and social domains.5 Indonesian is rooted in the language of an ethnic minority (Malay), with as few as 5 percent speaking Malay when it was chosen as the national language in 1928. Although almost all Indonesians can speak it, less than 20 percent choose Indonesian as their primary language at home. Choosing to primarily speak Indonesian at home, regardless of one’s initial motive, deepens the adop- tion of the national identity in this generation and the next, and ultimately advances nation building. We complement language use at home with two other proxies for nation building: