Speaker
Description
This paper examines how initial income endowments influence the distribution of public goods through ethnic favouritism in Bolivia. We argue that economic advantages, such as income, sustain favouritism among co-ethnics. To guide our analysis towards this idea, we develop a theoretical framework of favour exchange, which predicts that higher-income groups are better positioned to sustain favouritism by using their economic advantages to enforce mutual cooperation—for example, rewarding loyalty with access to resources or punishing defection by exclusion from future benefits. Using individual-ethnic level data on public goods access before and after Evo Morales’s presidency (2005–2012)—Bolivia’s first Indigenous president—and implementing a difference-in-differences strategy that exploits variation in ethnicity, time, and political support, we document two key findings. First, Morales’s co-ethnics (Aymaras) experienced greater access to public goods in provinces where his party was politically dominant. Second, consistent with the proposed mechanism, we provide initial evidence that this favouritism was primarily driven by high-income Aymaras, who saw disproportionate gains in access to resources such as electricity, and piped water. Our results highlight how economic disparities amplify the benefits of political alignment, reinforcing existing economic hierarchies within favoured groups and perpetuating inequality even when marginalized groups gain political representation.
| Keyword | Poverty and Inequality |
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