Center for International and Development Economics Research

The impact of ethnic diversity on the provision of local public goods and collective action in Africa remains largely unexplored. To address this gap, this paper explores the relationship between ethnic diversity and local primary school funding in rural western Kenya. The econometric identification strategy relies on the stable, historically determined patterns of ethnic land settlement in western Kenya. The main empirical result is that higher levels of local ethnic diversity is associated with sharply lower primary school funding and worse school facilities in western Kenya. The theory examines school choice and funding decisions when pupil mobility among schools is limited by land market imperfections and ethnic divisions, the relevant case for rural Africa, and predicts that local pupil transfers may lead to upward bias in OLS estimates of the impact of ethnic diversity. This theoretical prediction is confirmed in the data.