by Klaus Desmet, Michel Le Breton, Ignacio Ortuño-Ortín, Shlomo Weber

This paper presents a model of nations where culturally heterogeneous agents vote on the optimal level of public spending. Larger nations bene¯t from increasing returns in the provision of public goods, but bear the costs of greater cultural heterogeneity. This tradeo® induces agents' preferences over di®erent geographical con¯gurations, thus determining the likelihood of secession or uni¯cation. We provide empirical support for choosing genetic distances as a proxy of cultural heterogeneity and by using data on genetic distances, we examine the stability of the current map of Europe. We then identify the regions prone to secession and the countries that are more likely to merge. Furthermore, we estimate the welfare gains from European Union membership. Read more...

by Klaus Desmet, Ignacio Ortuño-Ortín, Shlomo Weber

This paper investigates the effect of linguistic diversity on redistribution in a broad cross-section of countries. We use the notion of "linguistic distances" and show that the commonly used fractionalization index, which ignores linguistic distances, yields insignificant results. However, once distances between languages are accounted for, linguistic diversity has both a statistically and economically significant effect on redistribution. With an average level of redistribution of 9.5% of GDP in our data set, an increase by one standard deviation in the degree of diversity lowers redistribution by approximately one percentage point. We also demonstrate that other measures, such as polarization and peripheral heterogeneity, provide similar results when linguistic distances are incorporated.  Read more...