Identity Politics and Economic Policy
February 16, 2018 12:00PM E53-482 Millikan Room
How does identity politics impact political conflict over economic policy? I present a formal model of political competition in ethnically divided societies to explicate the link between identity politics and politics over economic policymaking. I show that both brands of politics are symptomatic of the same strategic choice faced by politicians. My key insight is that incentives to engage in identity politics dampen motivations to win support using economic policy. By triggering identity in the electoral arena, politicians can boost their popularity among voters who value identity. But the identity card polarizes political preferences, such that groups mobilized on identity become relatively less responsive to policy. Politicians thus fashion economic platforms toward other groups. My focus on identity mobilization generates insights that upturn many expectations about who gets what from the state in divided democracies. Contrary to conventional wisdom, I show that ethnically homogenous industries receive fewer preferential policies, because politicians are more likely to court voters in these industries based on identity appeals while targeting workers in heterogenous industries using economic appeals. I test my theoretical predictions by using paired survey experiments, and original data on industry-level trade policies and indicators of religion and caste ethnicity in India.