Ethnic diversity and social welfare provision in non-democracies: Evidence from China
| Published date | 01 January 2022 |
| Date | 01 January 2022 |
| DOI | http://doi.org/10.1177/0192512120907115 |
| Subject Matter | Articles |
https://doi.org/10.1177/0192512120907115
International Political Science Review
2022, Vol. 43(1) 85 –102
© The Author(s) 2020
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DOI: 10.1177/0192512120907115
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Ethnic diversity and social welfare
provision in non-democracies:
Evidence from China
Yichen Guan
Harvard University, USA
Abstract
A large body of literature suggests that ethnic diversity matters to social welfare provision in democracies
by lowering the demand for public projects, but it does not look at the impact of ethnic diversity on social
welfare provision in authoritarian regimes. By analyzing county-level data on ethnic composition and public
spending on social welfare in China, this study finds that in an authoritarian settings, ethnic diversity is
correlated with a higher share of social welfare spending. Despite the divergent preferences people may
have for social welfare provision due to ethnic diversity, local Chinese government tends to provide a larger
share of social welfare spending in ethnically fragmented places to improve the general well-being of the
population and maintain regime stability. This finding extends our understanding of the relationship between
ethnic diversity and social welfare provision in non-democratic settings, shedding new light on how regime
type affects the shaping of local fiscal policy.
Keywords
Ethnic diversity, social welfare provision, public spending, authoritarianism, China
Introduction
The relationship between ethnic diversity and public spending has been widely explored in political
science and ethnic diversity has been identified as an important source of variation in social welfare
provision in both developed and developing countries. However, our understanding of how this
relationship operates is mainly limited to the context of democracies—where, through elections,
public sentiment can directly affect the share of fiscal spending on public services and public pro-
jects. The very few studies undertaken in authoritarian settings also treat individual incentives and
preferences as the object of study in the process of public goods production (Habyarimana et al.,
2007) while overlooking government strategies in social welfare provision. Does the level of ethnic
diversity still matter in non-democracies, where people’s attitudes and preferences cannot be directly
reflected in policy outcomes? In countries where the public relies mainly on local government to
Corresponding author:
Yichen Guan, Department of Government, Harvard University, 1737 Cambridge Street, Cambridge, MA 02138, USA.
Email: yichenguan@fas.harvard.edu
907115IPS0010.1177/0192512120907115International Political Science ReviewGuan
research-article2020
Article
86 International Political Science Review 43(1)
provide basic infrastructure and social care, is ethnic diversity also an important consideration in
policy formulation? If so, how?
To extend the literature to non-democratic countries, I investigate in this article the relationship
between ethnic diversity and social welfare spending at the sub-provincial level in China. Using
beta regression and fractional logit regression models to identify the link between ethnic diversity
and social welfare spending, I find that although people in authoritarian regimes do not choose
public spending policy by expressing their preferences through the ballot box, ethnic diversity still
matters in authoritarian settings. Contrary to what we see in democracies, I find that ethnic diver-
sity is correlated with a greater share of social welfare spending. Ethnic diversity is an important
factor to consider in social welfare policymaking because it is crucial for social stability. In a
responsive authoritarian regime like China, local government relies on good governance to build
up political capital. To offset the potential negative impact ethnic diversity can have on local econ-
omies and social stability, ethnically fragmented places are assigned greater fiscal resources for
social welfare spending to encourage development and improve people’s well-being.
In addition to ethnic diversity, the employment rate also matters to county-level social welfare
spending in China. Places with high unemployment would receive more social welfare because
unemployment can be an important source of social unrest and providing welfare is an effective
means of appeasing the population. These together show that in China, public well-being and
social stability are two important considerations for local government policymaking. Our results
confirm that the Chinese regime has adopted a strategy of performance-based legitimacy. Whereas
ethnic diversity matters to welfare provision in democracies through influencing in-group and out-
group attitudes and preferences, it matters in authoritarian regimes through influencing sources of
regime legitimacy.
It is worth noticing though, that the relationship between ethnic diversity and welfare provision
cannot be proven to be causal. Since there is no external shock affecting the level of ethnic diver-
sity in the three provinces under examination, we do not have a natural experiment. Due to data
diversity in the three provinces under examination, neither is it feasible to conduct panel data
analysis. Instead, I combine empirical analysis with theoretical reasoning to approach the research
question. That said, I fully acknowledge the limits imposed by the inability to test directly the
impact of ethnic diversity on social welfare spending.
Research design
Motivation
Over the years, a large body of literature has investigated the link between ethnic diversity and
public spending, finding an overall negative correlation between them at both the subnational level
(Lind, 2007) and across countries (e.g. Alesina et al., 2003; Baldwin and Huber, 2010; Banting and
Kymlicka, 2003; Kuijs, 2000; McCarty, 1993). Yet, non-democracies are often overlooked by the
literature on ethnic diversity and public spending for three reasons. Theoretically, non-democracies
are viewed as having weaker incentives to provide social welfare compared with democracies.
Since economic and governance performance does not matter much to dictators, who typically
enjoy power bases, “tenured” dictators have little incentive to devote tax revenues to social welfare
(Olson, 1993). Second, even where non-democracies have incentives to provide social welfare,
policy decisions about what and how much to provide comes from the top, not from the people.
The mechanism that works in democracies, where ethnic composition affects public preferences
for the type and amount of social welfare the government should provide, does not work in non-
democracies. Unless there is clear evidence that ethnic diversity is an important concern of the
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