Ethnic, Linguistic and Religious Heterogeneity and Preferences for Public Goods

Sarah Berens (University of Cologne) & David Brady (University of California, Riverside)

Abstract: One of the most prominent claims in political economy is that social heterogeneities weaken public support for public goods and redistribution. Despite the appeal of this theoretical argument, empirical tests outside certain global regions remain surprisingly scarce. This study sheds new light on this prominent argument by making use of a large set of survey data and more rigorous statistical techniques. Latin America and the Caribbean provide a useful setting to investigate these claims given these regions feature poor and developing countries, with many heterogeneities, and active political debates about public goods and redistribution. This study tests three hypotheses about the relationship between various forms of heterogeneity and individual-level support for public goods redistribution (henceforth “preferences”): (1) heterogeneity is negatively associated with preferences, (2) heterogeneity is positively associated with preferences; and (3) heterogeneity is negatively associated with preferences among the dominant group.

The Exit Seekers and the Doomed – Is Informalization a Function of Social Policy Discontent?

Sarah Berens (University of Cologne)

(Revise & Resubmit)

Recently presented at REPAL, Lima, Peru (2017)

Abstract: The informal sector challenges economic growth and the abatement of income disparities in developing countries. This study argues that discontent with social services can increase the informal sector when individuals use it as an exit option to an unsatisfying welfare system. Building a micro foundation for informal employment, the article distinguishes between those individuals who have sufficient bargaining power to choose between formal and informal labor, labeled as potential exit seekers, and those who do not, the ‘doomed’. A logistic hierarchical model on survey data from Latin America for 2009 and 2010 is used to test the hypothesis. Findings support the argument. While lower bargaining power in the form of lack of education, an educationally unprivileged parental background, and lower income are most decisive for employment in the informal labor market, social policy discontent and a dysfunctional institutional framework that signals incapacity to provide public goods increase the likelihood of being informally employed among the well educated.