Abstract

We use a dataset which codes executive power for 564 ethnic groups in 130 countries on a seven-point scale to show that ethnic groups that gain political power benefit economically. This effect holds for groups that enter government, the extensive margin, and for groups that concentrate more power onto themselves, the intensive margin. Both these effects disappear in the presence of strong political constraints on executive power. Institutional constraints are even effective in preventing favoritism when groups concentrate all power in the executive onto themselves.