The Rich, the Poor, and the Other: Distributional Consequences of Philanthropic Provisioning of Public Goods
38 Pages Posted: 24 Oct 2019
Date Written: October 15, 2019
Political economists consistently find that, in the absence of government regulation, a system of voluntary donations from private actors leads to an under-supply of public goods. However, these models rarely theoretically investigate or empirically test the allocational consequences of voluntary provision. How do the elite's charitable contributions to public goods affect the distributional equilibrium across ethnic and social groups? I argue that when the elite is not politically accountable for public provisioning, rewards for supplying and punishment for shirking are operationalized through social and geographic links; thus the voluntary contributions of the elites lead to imbalances that favor localities with which elites are connected. I test this argument by exploiting the fact that fountains in Ottoman Istanbul were built and maintained by the private initiatives of the Muslim elite through the waqf system. I find that elites supplied more drinking water to co-ethnic and elite neighborhoods than to other neighborhoods.
Keywords: Public Goods, Elites, Ottoman Empire, Waqfs, Ethnic Diversity
JEL Classification: N95, R53, R12, I31, Z13
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