Moderation Effects of Institutional Quality, Diversity, Income inequality and Globalization on Social Cohesion: An Empirical evidence.

Abstract

Social cohesion is both an end, as well as a mean, to achieve other economic and developmental goals. As an end, a more cohesive society can be thought of as a peaceful place to live in. As a mean, social cohesion has various economic and developmental implications. Therefore, nurturing social cohesion can be a desirable objective and knowing about different determinants of social cohesion can be helpful in this regard. Ethno-linguistic diversity and socioeconomic deprivations have been identified as such determinants in the existing literature. Well-functioning institutions can also be good predictors of social cohesion in a society. They can help to mitigate the negative effects of diversity on social cohesion. However, hardly any study has empirically investigated the moderating effects of institutions on social cohesion. The current study has tried to fill this gap. For this purpose, a cross country analysis has been done by employing the Least Squares Dummy Variables (LSDV) technique for empirical estimations. Institutional quality has been measured with the help of an index that has been constructed by taking into account the political, legal, and economic dimensions of institutional quality. The results suggest that diversity, income inequality, and globalization have negative whereas institutional quality has positive effects on social cohesion. The use of the interactive term of institutional quality with diversity, income inequality, and globalization reveals that institutional quality works to nullify the negative effects of diversity, income inequality, and globalization on social cohesion. .