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Social Fractionalization, Endogenous Appropriation Norms, and Economic Development
Author(s) -
LINDNER INES,
STRULIK HOLGER
Publication year - 2008
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/j.1468-0335.2007.00614.x
Subject(s) - fractionalization , appropriation , property rights , economics , homogeneous , endogenous growth theory , economic system , microeconomics , market economy , law , political science , mathematics , philosophy , linguistics , human capital , combinatorics , ethnic group
We investigate how social composition affects competitive and cooperative behaviour in a linear growth model without secure property rights. If a society is homogeneous or highly fractionalized, it is in the self‐interest of people to cooperate. The first‐best allocation is enforced through trigger strategies, and growth is independent from social structure. If a society is polarized, i.e. if it consists of a small number of groups, the first‐best solution can turn out to be unenforceable and groups will follow an exploitative strategy. In this case, the rate of growth is monotonously decreasing in the degree of fractionalization.