Essays on Political Economy of Development

The themes of this dissertation center around the influence of culture on development and democracy with applications in a large Muslim-majority nation, Indonesia. By culture, I mean groups shared beliefs and preferences which are shaped by religion, social identities, and norms. The first paper focuses on the practice of religious veiling and how it relates to female economic participation. Using human-coded data based on high school book pictures, the study demonstrates that the increasing veil take-up represents the effort by young women in negotiating their desire to benefit from the new economic opportunities and the prevailing social norms in society. The evidence shows that contrary to the simplistic views that identify veiling with religious fundamentalism or oppression/subjugation of women, I show that this practice does not imply a lack of education or social backwardness. If anything, education increases the probability of a young female to wear a veil. Moreover, using an instrumental variable method, I show that an increase in the availability of economic opportunities for females has caused an increase in the adoption of headscarves. To establish this idea further, I show that economic opportunities that do not necessarily require women to leave their domestic compound do not correlate with veil take-up. In the second paper, I shift the focus on the determinant of religious violence. I show that the competition between factions within the religious majority group could predict the severity of religious conflicts. Perpetrating violence to groups that are considered ``others" is an effective way to signal the group’s commitment, hence to attract loyalty and followers. I devise a new index to capture this idea, which differs from the widely used polarization and fractionalization indexes. I also deploy a simple machine learning method to categorize schools' affiliation into the Traditionalist and the Modernist faction to estimate the relative strength of these factions. The evidence shows that this index has a robust relationship with the fatalities of religious conflicts. Interestingly, I also find that this index does not predict other types of violence, such as crimes, domestic violence, or other conflicts that are not religiously motivated. In the third paper, I move on to analyzing the impact of religious ideology on party competition and democratization in Indonesia. Using novel, hand-coded data of over 1500 reports of MPs’ wealth declaration, I show that ideologist MPs (MPs who are coming from ideological, Islamist parties) differ from their non-ideologist MP fellows both in terms of selection and behavior during office. They are in general poorer, have a significantly larger number of offsprings, and are less likely to be women. Most importantly, I also show that they accumulate significantly less wealth while holding a parliamentary seat. Further analysis suggests that different vote gathering mechanisms and voter-politician linkages may explain this gap in behavior: Islamist politicians rely more on their ideological appeals rather than money to gather votes. Putting together these three pieces of work, I demonstrate how culture shapes and influences the process of development and democratization in a way that might challenge the current wisdom.