An influential argument on how ethnic diversity might undermine public goods production, cooperation and collective action rests on assumptions from sociological/social-psychological theories of group conflict. The core assumptions of this perspective are that people will develop social group identifications where ethnic similarities typically function as group boundaries. Negative views
on out-group members are caused by real or perceived competition between your in-group and out-groups over scarce resources such as rights and social status (see e.g. Bobo 1999; Semyonov, Raijman, and Gorodzeisky 2006).
The core assumptions and implications of conflict theory stand in stark contrast to those of the competing inter-group contact theory (see e.g. Pettigrew 1998). According to this perspective, prejudice and negative stereotyping of minorities might decline with contact with out-group members. Since the frequency of contact will increase with ethnic diversity, any negative effects of immigration on welfare state support caused by increased competition over resources might be o_-set by the positive consequences of increased contact with members of the minority group. While inter-group contact theory is frequently used to debunk the bleak perspective of conflict theory, it is often forgotten that contact theory proposes quite restrictive conditions for in what contexts contact will reduce majority-minority conflict: Contact will reduce tensions only if those in contact have equal status in the particular context, if they share common goals, if they are in a cooperative context, and if the contact takes place under some form of authority (see Pettigrew 1998).
The existing empirical literature on the consequences of ethnic diversity tends to overlook how important these different underlying assumptions are, and simply regress e.g. some indicator of views on diversity on an indicator of ethnic diversity (e.g. Senik, Stichnoth, and Van der Straeten 2009). The discrepancy between the theoretical and empirical model implies that the empirical estimates are not very informative about the importance of minority-majority contact. We take the underlying assumptions of contact theory more seriously than in the previous literature and test it in a setting where theory suggests it is most likely to hold. We also set up a research design with a random allocation to give our estimates a causal interpretation.
Specifically, we propose an explicit test of contact theory in a context where the strict assumptions of the theory is plausible, namely in the military. In fact, the initial inspiration and empirical support for contact theory is from a study of integration of Black soldiers into the US Army (see Pettigrew 1998). Soldiers of private rank have equal social status within the army, they share the common goals of the unit, they need to cooperate to solve their tasks, and contact takes place in a context with an explicit, enforcing authority. Moreover, the army is a promising venue to study social interaction since the soldiers cannot determine who they want to share rooms with and who they want to serve with. Thus, biases due to self-selection into social interactions based on own preferences (such as prejudice) are reduced, and we have exogenous exposure to contact with out-group members.