Among the most radical affirmative action policies is to mandate political representation for minorities. For example, in India, the Constitution stipulates that a certain share of seats in legislative assemblies be set aside for scheduled castes (SC) and scheduled tribes (ST){the two principal disadvantaged minority groups. Specifically, the policy rule is that the share of seats reserved for each minority group must equal the group's population share according to the most recent decennial census. Although there has been research on whether political reservation for minorities affects policy choices, it remains an open question whether it reduces poverty. In this paper, I examine the impact of political reservation for minorities on poverty in India using state-level panel data. A general problem when estimating the effect of minority political representation on outcomes is that the representation variable is likely endogenous.
For example, states that elect more minorities to office might also treat minorities better in schools and the labor market; consequently the estimated effect would not be the causal effect of minority political representation on the outcome. In this paper, 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 address the endogeneity problem. Using data on sixteen Indian states for the period 1960-1992, I nd that increasing the share of seats reserved for ST significantly reduces poverty in both urban and rural areas. Increasing the share of seats reserved for SC significantly reduces urban poverty but has no impact on rural poverty. Interestingly, it appears to be people just below the poverty line, not those far below it, who are benefiting.