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Does Inequality lead to Conflict?

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  • Indranil Dutta
  • Ajit Mishra

Abstract

This paper presents a simple model to show how distributional concerns can engender social conflict. They have a two period model, where the cost of conflict is endogenous in the sense that parties involved have full control over how much conflict they can create. We find that anticipated future inequality plays a crucial role in determining the level of conflict in the current period. The model also provides an explanation for why similar levels of inequality may exhibit drastically different levels of conflict. Further, they argue that the link between inequality and conflict may be non-monotonic. [Research Paper No. 2005/34]

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Bibliographic Info

Paper provided by eSocialSciences in its series Working Papers with number id:3246.

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Date of creation: Dec 2010
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Handle: RePEc:ess:wpaper:id:3246

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Keywords: conflict; wealth inequality; Nash bargaining;

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References

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  1. Perotti, Roberto & Alesina, Alberto, 1996. "Income Distribution, Political Instability, and Investment," Scholarly Articles 4553018, Harvard University Department of Economics.
  2. Paul Collier & Anke Hoeffler, 2004. "Greed and Grievance in Civil War," Development and Comp Systems 0409007, EconWPA.
  3. Alesina, Alberto & Perotti, Roberto, 1996. "Income distribution, political instability, and investment," European Economic Review, Elsevier, vol. 40(6), pages 1203-1228, June.
  4. Michelle R. Garfinkel, 2003. "Stable Alliance Formation in Distributional Conflict," Public Economics 0305001, EconWPA, revised 16 Jun 2003.
  5. Rodrik, Dani, 1999. " Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses," Journal of Economic Growth, Springer, vol. 4(4), pages 385-412, December.
  6. Michelle R. Garfinkel, 2004. "On the Stability of Group Formation: Managing the Conflict Within," Conflict Management and Peace Science, Peace Science Society (International), vol. 21(1), pages 43-68, February.
  7. Paul Collier & Anke Hoeffler, 2000. "Greed and Grievance in Civil War," CSAE Working Paper Series 2000-18, Centre for the Study of African Economies, University of Oxford.
  8. Michelle R Garfinkel & Stergios Skaperdas, 2001. "Conflict Without Misperceptions or Incomplete Information: How the Future Matters," Levine's Working Paper Archive 563824000000000011, David K. Levine.
  9. Skaperdas, Stergios & Syropoulos, Constantinos, 1996. "Can the shadow of the future harm cooperation?," Journal of Economic Behavior & Organization, Elsevier, vol. 29(3), pages 355-372, May.
  10. Paul Collier & V. L. Elliott & HÃ¥vard Hegre & Anke Hoeffler & Marta Reynal-Querol & Nicholas Sambanis, 2003. "Breaking the Conflict Trap : Civil War and Development Policy," World Bank Publications, The World Bank, number 13938, October.
  11. Benhabib, Jess & Rustichini, Aldo, 1996. " Social Conflict and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 125-42, March.
  12. Skaperdas, Stergios & Syropoulos, Constantinos, 1997. "The Distribution of Income in the Presence of Appropriative Activities," Economica, London School of Economics and Political Science, vol. 64(253), pages 101-17, February.
  13. Wayne Nafziger, E. & Auvinen, Juha, 2002. "Economic Development, Inequality, War, and State Violence," World Development, Elsevier, vol. 30(2), pages 153-163, February.
  14. Jeffrey D. Sachs, 1989. "Social Conflict and Populist Policies in Latin America," NBER Working Papers 2897, National Bureau of Economic Research, Inc.
  15. Christopher Cramer, 2003. "Does inequality cause conflict?," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(4), pages 397-412.
  16. Jack Hirshleifer, 1991. "The Paradox Of Power," Economics and Politics, Wiley Blackwell, vol. 3(3), pages 177-200, November.
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Cited by:
  1. Savoia, Antonio & Easaw, Joshy & McKay, Andrew, 2010. "Inequality, Democracy, and Institutions: A Critical Review of Recent Research," World Development, Elsevier, vol. 38(2), pages 142-154, February.

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