DP11528 A simple characterization of the family of diversity indices

Author(s): Davydov Denis, Shlomo Weber
Publication Date: September 2016
Keyword(s): axioms, consistency, Diversity index, entropy, fractionalization
JEL(s): F51, F63, Z13
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=11528

Over the last twenty years economists have become increasingly interested whether the diversity enhances or impedes economic and social development of a society that consist of multiple distinct population groups. On the one hand, Sassen (2006) and Florida (2002) claim that ethnic and cultural diversity was a crucial factor in urban development. However, there is another line of research, originated by Mauro (1995) and Easterly and Levine (1997) (see also Ginsburgh and Weber, 2011), showing that an excessive degree of the societal fractionalization may have negative, and sometimes, catastrophic, consequences for economic and societal growth.