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Appropriate Institutions? Traditional Governance and Public Goods Provision in Oaxaca, Mexico

What are the consequences of the adoption of traditional governance institutions among indigenous groups for local government affairs? We study the 1995 Usos y Costumbres traditional governance reform in the state of Oaxaca, which legitimized these structures in a subset of its municipalities. We show that the degree of ethnolinguistic polarization between residents of outlying communities and residents of municipal capitals is an important barrier to the former's political representation in local elections. In terms of public goods provision, villages of ethnic minorities are less likely to gain electric service but more likely to gain sewerage services and public schooling.