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'Living' wage, class conflict and ethnic strife

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  • Dasgupta, Indraneel

Abstract

We examine how group-specific differences in reservation wage, arising due to asymmetries in social entitlements, impact distribution via the joint determination of class conflict between workers and employers, and 'ethnic' conflict among workers. We model a two-dimensional contest, where two unions, representing different sections of workers, jointly but non-cooperatively invest resources against employers in enforcing an exogenously given rent, while also contesting one another. The rent arises from a 'living' wage, set above reservation wage rates via labour regulations. We show that high reservation wage workers gain, and employers lose, from better social entitlements for low reservation wage workers. The latter however benefit, with employers and against the former, from weak labour regulations. When minority/immigrant workers are marginalized both in the labour market and in non-wage entitlements, improving job access and expanding 'social support' has contradictory effects on class and ethnic conflicts. 'Trade unionism', i.e. political articulation of shared economic interests alone, appears insufficient to temper ethnic conflicts among workers.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 72 (2009)
Issue (Month): 2 (November)
Pages: 750-765

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Handle: RePEc:eee:jeborg:v:72:y:2009:i:2:p:750-765

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Web page: http://www.elsevier.com/locate/jebo

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Keywords: Class conflict Ethnic conflict Living wage Labour regulation Social entitlement Affirmative action Distribution;

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  1. Dasgupta, Indraneel & Kanbur, Ravi, 2007. "Community and class antagonism," Journal of Public Economics, Elsevier, vol. 91(9), pages 1816-1842, September.
  2. Dasgupta, Indraneel & Kanbur, Ravi, 2003. "Bridging Communal Divides: Separation, Patronage, Integration," Working Papers 127235, Cornell University, Department of Applied Economics and Management.
  3. Michelle R. Garfinkel & Stergios Skaperdas, 2006. "Economics of Conflict: An Overview," Working Papers 050623, University of California-Irvine, Department of Economics, revised Sep 2006.
  4. Woojin Lee & John E. Roemer, 2005. "The Rise and Fall of Unionised Labour Markets: A Political Economy Approach," Economic Journal, Royal Economic Society, vol. 115(500), pages 28-67, 01.
  5. Glazer, Amihai, 2002. "Allies as rivals: internal and external rent seeking," Journal of Economic Behavior & Organization, Elsevier, vol. 48(2), pages 155-162, June.
  6. Skaperdas, Stergios, 1996. "Contest Success Functions," Economic Theory, Springer, vol. 7(2), pages 283-90, February.
  7. John E. Roemer, 1979. "Divide and Conquer: Microfoundations of a Marxian Theory of Wage Discrimination," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 695-705, Autumn.
  8. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
  9. Woojin Lee & John Roemer & Karine Van der Straeten, 2006. "Racism, Xenophobia, and Redistribution," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 446-454, 04-05.
  10. Dasgupta, Indraneel & Kanbur, Ravi, 2003. "Community And Anti-Poverty Targeting," Working Papers 127774, Cornell University, Department of Applied Economics and Management.
  11. Mishra, Prachi, 2007. "Emigration and wages in source countries: Evidence from Mexico," Journal of Development Economics, Elsevier, vol. 82(1), pages 180-199, January.
  12. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  13. Katz, Eliakim & Tokatlidu, Julia, 1996. "Group competition for rents," European Journal of Political Economy, Elsevier, vol. 12(4), pages 599-607, December.
  14. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2001. "Why Doesn't the United States Have a European-Style Welfare State?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 187-278.
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Cited by:
  1. Basu, Arnab K., 2011. "Impact of Rural Employment Guarantee Schemes on Seasonal Labor Markets: Optimum Compensation and Workers' Welfare," IZA Discussion Papers 5701, Institute for the Study of Labor (IZA).
  2. Jay Pil Choi & Subhasish M. Chowdhury & Jaesoo Kim, 2011. "Group Contests with Internal Conflict and Power Asymmetry," University of East Anglia Applied and Financial Economics Working Paper Series 025, School of Economics, University of East Anglia, Norwich, UK..
  3. Dasgupta, Indraneel & Mukherjee, Diganta, 2014. "Assimilation, Criminality and Ethnic Conflict," IZA Discussion Papers 7924, Institute for the Study of Labor (IZA).
  4. Indraneel Dasgupta & Ravi Kanbur, 2011. "Does philanthropy reduce inequality?," Journal of Economic Inequality, Springer, vol. 9(1), pages 1-21, March.

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