Clientelism and violence: The politics of informal economy

As opposed to acute political violence associated with riots and military coups, the paper addresses the problem of chronic and persistent political violence prevalent in less developed economies. In such economies, a significant part of the population is engaged in the informal sector where property rights are not well-defined and where political protection of rights is necessary for survival. To attract informal sector voters, political parties indulge in violence which signal their strengths to protect ill-defined rights. The paper shows that (a) a larger informal sector leads to more violence; (b) an increase in the relative size of the informal sector increases the winning probability of the worse performing party; (c) both worse performing and better performing parties indulge into same level of violence provided they have the same cost of causing violence. A high correlation between informal employment and political crimes among the Indian states empirically supports our argument.