ABSTRACT
Economists suggest that ethnic diversity is one of the reasons for stagnation and corruption in the developing world, and explains why the USA does not have a European-style welfare state. In many other European countries, ethnic diversity is related to a decline in social trust and civic engagement. Ethnic diversity can be a consequence both of indigenous ethnic heterogeneity and of recent immigration. Explanations for ethnic diversity effects that are based on negative attitudes towards out-groups come in two variants: social identity and group threat theories. Negative diversity effects may also be moderated through the formation of inclusive identities that encompass both minorities and the majority group. The final and least researched type of moderators are institutional effects. Since here lies the most direct angle for potential interventions, the question of the potential relevance of the political context to mitigate or even reverse negative effects of ethnic diversity on social cohesion is of utmost importance.
