Identity, Economic Mobility and Conflict

The paper provides a theory that explains why class conflicts are less frequent than ethnic conflicts. We posit the problem as one of alliance formation. In our model agents can form alliances either in the economic class line or in ethnic alliance. In case of ethnic alliance, one remains in the same ethnic group before and after the conflict. That is not the case of class identity that can change following an economic shock. Hence, even if someone wins a conflict fighting for one economic class, her class identity may change post-conflict and therefore, may not get the winner's pay-off. Such uncertainty discourages one to form alliance in the class line. Similar issue does not arise in case of ethnic alliance making ethnic conflict a more likely outcome in equilibrium. Our baseline model treats the conflict pay-off as a private good. But we extend our model to the public good case as well. Our results hold for both the cases even though the chance of conflicts are higher in case of public goods.