Prepared by: Areesha Zaheer

Abstract
 empirical study is based on nationally representative
cross-sectional survey data gathered to investigate the
effect of ethnic diversity on personal and family
incomes in Bosnia and Herzegovina (BiH), a post-
conflict society .

 the authors find lower probabilities of respondents in

ethnically diverse neighbourhoods being in the lowest
income categories but higher probabilities of being in
medium and higher income categories
Need for Research
 Ethnic diversity is an ongoing research topic in
economics, investigated both at macro and micro-
economic levels and the finding suggests the need for
further empirical research into the potential welfare
outcomes of ethnic diversity.
 Efendic et al. (2015) find that ethnic diversity in the
post-conflict environment of Bosnia and Herzegovina
(BiH) is beneficial for young businesses.
 Motivated by this research and a growing body of
literature that investigates the effect of ethnic diversity
in economics.
 we conducted a new survey of the household sector in
BiH to investigate whether individual and household
economic performance is associated with ethnic
diversity in the local area.
Literature Review - Macro level studies
Literature Review - Micro level studies
Sampling and data
 we investigate responses from the household sector
obtained over the period June-October 2012 from a
cross-section survey conducted in Bosnia and
Herzegovina.
 we deal with the individual responses (only one
individual per household) of adults who are citizens of
BiH. Each individual was randomly selected for
interview based on the sample criteria.
 The targeted sample was 2,000 individuals (we ended
up with 2,017 observations)
Survey reliability
 “Don’t know” or, for some questions, “Don’t wish to
answer” responses account on average for 3.5% of
responses, while around seven per cent of the sample
responded in this way to the questions on ethnic
minority/majority status and individual earnings.
 “Don’t know” or “Don’t wish to answer” responses are
typically relatively high for income and ethnicity
variables.
 The focus was on the answers to main questions and
these answers were remain till 5%.
Research Design and modeling
 The survey design for this sample is straightforward:
the whole of BiH was stratified into 16 regions (10
covering the Federation of BiH, five the Republika
Srpska and one the District Brcko of BiH).

 Theoretical framework starting point is the Mincer

earnings function (Mincer 1974) that relates earnings
to schooling and experience
Conclusion
 This study reveals positive economic consequences of
local ethnic diversity for individuals and households.
Consistent with most of the micro-focused literature,
we find that ethnic diversity within neighbourhoods –
where it exists – is not an economic threat but is rather
associated with positive outcomes for individuals and
families; in particular, lower probabilities of being in
the lowest income categories and higher probabilities
of being in medium and higher income categories