We study how identity politics determines clientelism and provision of public goods in representative democracies. Parties cultivate vote banks—a group of voters who vote along identity lines — in exchange for clientelistic transfers, and provide public goods to nonpartisan voters. There is ex-post identity formation among non-partisans that depends on the party in power. This generates an asymmetry in ex-post conflict payoff for the majority identity. The main theoretical result proposes a new mechanism for clientelism and rent seeking that is driven by identity politics. We further show that asymmetry in identity payoffs i) increases investment in conflict when the party with the support of minorities wins; and ii) increases public goods provision by both parties when income of minorities is below a threshold. We provide empirical evidence from state level elections in India for the period from 1983 till 2000. Results show that identity conflict is more intense when the party with minority identity vote bank is in power. This effect is magnified by the income of minorities. Further, provision of public goods under the party with minority vote bank increases with asymmetry in identity payoffs.
Ticku, R. & Venkatesh, R. S. (2020). Identity politics, clientelism, and public goods provision: Theory and evidence. ESI Working Paper 20-13. https://digitalcommons.chapman.edu/esi_working_papers/307/