Does Political Reservation for Minorities Reduce Poverty? Evidence from India

Affirmative action policies have been proposed and used in both developed and developing countries to raise the well-being of disadvantaged minority groups. Among the most radical of these policies has been to mandate political representation for minorities. This paper examines the effect of political reservation for minorities on poverty in India. The Indian constitution stipulates that the share of reserved seats for scheduled castes and scheduled tribes–two principal disadvantaged minorities in India–be the same as their share in most recent decennial census of population. I take advantage of the state–time variation in minority political representation generated by the aforementioned policy rule in the Indian Constitution and the timing of elections to provide exogenous variation in minority representation. Using state level panel data, I find that increasing scheduled tribe representation significantly reduced rural and urban poverty, while increasing scheduled caste representation reduces urban poverty but has no impact on rural poverty. Interestingly, it appears to be the people just below the poverty line, not those far below it, who are benefiting. These findings survive a variety of robustness checks. JEL classification: I2, H40, O10, O2.