Ethnic fractionalization and unemployment

Using data on 74 countries and a large number of controls, this paper finds that a higher degree of ethnic fractionalization is correlated with a higher unemployment rate. This is probably mainly because fractionalization reduces labor market efficiency.

► We use data on 74 countries and a large number of controls. ► Higher ethnic fractionalization is correlated with a higher unemployment rate. ► The magnitude of the effect is substantial.