Free riding and ethnic heterogeneity

This paper provides a new explanation for lower levels of public good provision in heterogeneous societies compared to their homogeneous counterparts. Social sharing norms force rich individuals to share part of their income with their poor relatives, but do not apply across different ethnic groups. Because there is a more extensive redistribution in more homogeneous societies, the cost of contributing to the public good is lower. The model predicts the level of public goods provision and welfare monotonically decreases with the number of different ethnic groups. (C) 2019 Elsevier B.V. All rights reserved.