ABSTRACT
We investigate how ethnic solidarities and rivalries contribute to five types of local community activities in Indonesia and overcome free-riding.
As an elliciting strategy, we estimate the impact of moderate inter-group violence, which preserves the existence of activities, on these activities to reveal these ethnic relationships. Individual participation in permanent local activities is matched with violent events at district level. Causal identification is based on extensive controls and heteorogeneity effects, robustness checks, and geographical spillovers and ethnic networks for instrumentation.
Heterogeneous causal effects of violence are found that locally vary with: activity type, ethnic polarization, own-group involvement in the same activity, and unobserved heterogeneity. While violence generally weakens all activities that are not immune to conflicts, in contexts of high ethnic polarization it can stimulate participation (e.g., in cooperatives). In contrast, in non-violent contexts polarization depresses participation. Moreover, local involvement of own-group members in an activity induces further participation of individuals of this ethnic group in the same activity. This solidarity effect is amplified by both violence and ethnic polarization. A few theoretical mechanisms are suggested to interpret these results.
The estimates suggest that noxious phenomena may occur within community groups: ethnic conflicts, corruption, exclusion, and capture by an ethnic group or by elites. Therefore, local community activities should not be considered as a development panacea.