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The Economics of Ethnic Prejudice

Project description

Fostering a deeper understanding of our diverse societies

Why do ethnic differences hold varying significance in different contexts? It’s a question that has long perplexed researchers. While the implications of ethnic divisions for conflict and economic development are crucial, this vital question has been sorely neglected in economic research. Surprisingly, this critical inquiry has been unjustly sidelined in economic research. In response, the ERC-funded Econ_Prejudice project aims to delve into the complex dynamics of ethnic self-identification. Through three distinct pillars of research, it will examine the social, economic, and political determinants of ethnic tensions, unravelling the multifaceted factors that shape the importance of ethnic diversity in conflict and economic progress. The research will help shape future policies.


Why do ethnic differences matter in some cases and not in others? What determines the strength of ethnic self-identification? This question is central to understanding the consequences of ethnic divisions for conflict and economic development and their policy implications but it was neglected by economic research until now. This project aims at filling this gap by endogenizing ethnic identity. We study how the salience of ethnic differences depends on economic and social context and policies of nation building. Our research program is organized around 3 pillars focusing on social, economic, and political determinants of ethnic tensions, respectively. The first pillar tests social psychology theories of ethnic identity using natural experiments, generated by forced mass movements of ethnic groups in Eastern Europe and from Eastern Europe to Central Asia as a result of WWII. The second pillar studies how market interactions between representatives of different ethnic groups and, in particular, ethnic occupational segregation affects ethnic tensions in the context of historical anti-Jewish violence following agro-climatic income shocks in the 19th and 20th century Eastern Europe. The third pillar focuses on the effects of political manipulation on ethnic conflict in the context of the historical experiment of nation building in Central Asia. It studies how political empowerment of a certain ethnic elite in a multi-ethnic traditional society coupled with a set of nation-building policies affects ethnic conflicts depending on the pre-existing ethnic mix and the distribution of political power among ethnic elites. This research will shed light on factors that make ethnic diversity important for conflict and economic development.

Host institution

Net EU contribution
€ 1 598 307,50
75014 Paris

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The organization defined itself as SME (small and medium-sized enterprise) at the time the Grant Agreement was signed.

Ile-de-France Ile-de-France Paris
Activity type
Higher or Secondary Education Establishments
Total cost
€ 1 598 307,50

Beneficiaries (1)