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Workers, Warriors and Criminals: Social Conflict in General Equilibrium

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Author Info
Pedro Dal Bó
Ernesto Dal Bó

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Abstract

We offer a simple general equilibrium model to analyze how economy-wide forces (i.e. shocks to terms of trade, technology and endowments) will affect the intensity of social conflict over the distribution of resources. Examples of conflict activities range from crime to civil war. We show that not all favorable shocks to an economy will reduce conflict, even when they could make society richer. Rather, positive shocks to labor intensive industries will raise wages and diminish social conflict, while positive shocks to capital intensive industries will do just the opposite. The key requirement is that the appropriation activity be more labor intensive than the average of the productive industries. Our model can account for the curse of natural resources, it explains why aid in kind to war ridden societies may have perverse effects, and how international trade policy should be debated if civil conflict in poorer countries is a concern. Including appropriation activities into a canonic general equilibrium model introduces a social constraint to policy analysis. Thus, we can also account for "optimal populist" policies, and "national development" strategies

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Paper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 642.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nasm04:642

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Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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  1. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "Inequality and Violent Crime," Journal of Law & Economics, University of Chicago Press, vol. 45(1), pages 1-40, April.
  2. Alberto Ades & Rafael Di Tella, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September. [Downloadable!] (restricted)
  3. Grossman, Herschel I & Kim, Minseong, 1995. "Swords or Plowshares? A Theory of the Security of Claims to Property," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1275-88, December. [Downloadable!] (restricted)
  4. Hirshleifer, Jack, 1995. "Anarchy and Its Breakdown," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 26-52, February. [Downloadable!] (restricted)
  5. Acemoglu, Daron & Robinson, James A, 1999. "Inefficient Redistribution," CEPR Discussion Papers 2122, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  6. Bhagwati, Jagdish N & Srinivasan, T N, 1980. "Revenue Seeking: A Generalization of the Theory of Tariffs," Journal of Political Economy, University of Chicago Press, vol. 88(6), pages 1069-87, December. [Downloadable!] (restricted)
  7. Edward Miguel & Shanker Satyanath & Ernest Sergenti, 2004. "Economic Shocks and Civil Conflict: An Instrumental Variables Approach," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 725-753, August.
  8. Daron Acemoglu & James A. Robinson, 2001. "A Theory of Political Transitions," American Economic Review, American Economic Association, vol. 91(4), pages 938-963, September. [Downloadable!] (restricted)
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  9. Collier, Paul & Hoeffler, Anke, 1998. "On Economic Causes of Civil War," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 563-73, October.
  10. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December. [Downloadable!] (restricted)
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  11. Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 521-65, May-June. [Downloadable!] (restricted)
  12. Mussa, Michael, 1974. "Tariffs and the Distribution of Income: The Importance of Factor Specificity, Substitutability, and Intensity in the Short and Long Run," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1191-1203, Nov.-Dec.. [Downloadable!] (restricted)
  13. Grogger, Jeff, 1998. "Market Wages and Youth Crime," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 756-91, October. [Downloadable!] (restricted)
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  14. Garfinkel, Michelle R, 1990. "Arming as a Strategic Investment in a Cooperative Equilibrium," American Economic Review, American Economic Association, vol. 80(1), pages 50-68, March. [Downloadable!] (restricted)
  15. Coate, Stephen & Morris, Stephen, 1995. "On the Form of Transfers in Special Interests," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1210-35, December. [Downloadable!] (restricted)
  16. Skaperdas, Stergios, 1992. "Cooperation, Conflict, and Power in the Absence of Property Rights," American Economic Review, American Economic Association, vol. 82(4), pages 720-39, September. [Downloadable!] (restricted)
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  17. Robert MacCulloch, 2001. "What Makes a Revolution?," STICERD - Development Economics Papers 30, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
  18. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring. [Downloadable!] (restricted)
  19. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September. [Downloadable!] (restricted)
  20. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michelle R. Garfinkel & Stergios Skaperdas & Constantinos Syropoulos, 2005. "Globalization and Domestic Conflict," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. Daniel Mejía & Carlos Esteban Posada, 2005. "Populist Policies In The Transition To Democracy," BORRADORES DE ECONOMIA 003357, BANCO DE LA REPÚBLICA. [Downloadable!]
    Other versions:
  3. Rafael Di Tella & Sebastian Galiani & Ernesto Schargrodsky, 2006. "Crime Distribution and Victim Behavior during a Crime Wave," Working Papers 0044, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  4. Rafael Di Tella & Sebastian Galiani & Ernesto Schargrodsky, 2006. "Crime Distribution & Victim Behavior During a Crime Wave," William Davidson Institute Working Papers Series wp849, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  5. Michelle R. Garfinkel & Stergios Skaperdas, 2006. "Economics of Conflict: An Overview," Working Papers 050623, University of California-Irvine, Department of Economics, revised Sep 2006. [Downloadable!]
    Other versions:
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