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Insurgent Compensation: Evidence from Iraq

Author

Listed:
  • Benjamin W. Bahney
  • Radha K. Iyengar
  • Patrick B. Johnston
  • Danielle F. Jung
  • Jacob N. Shapiro
  • Howard J. Shatz

Abstract

Participating in insurgency is physically risky. Why do people do so? Using new data on 3,799 payments to insurgent fighters by Al Qa'ida Iraq, we find that: (i) wages were extremely low relative to outside options, even compared to unskilled labor; (ii) the estimated risk premium is negative; and (iii) the wage schedule favors equalization and provides additional compensation for larger families. These results challenge the notion that fighters are paid their marginal product, or the opportunity cost of their time. They may be consistent with a "lemons" model in which fighters signal commitment by accepting low wages.

Suggested Citation

  • Benjamin W. Bahney & Radha K. Iyengar & Patrick B. Johnston & Danielle F. Jung & Jacob N. Shapiro & Howard J. Shatz, 2013. "Insurgent Compensation: Evidence from Iraq," American Economic Review, American Economic Association, vol. 103(3), pages 518-522, May.
    • Handle: RePEc:aea:aecrev:v:103:y:2013:i:3:p:518-22
    Note: DOI: 10.1257/aer.103.3.518
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    References listed on IDEAS

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    Cited by:

    1. Lea Cassar, 2014. "Job mission as a substitute for monetary incentives: experimental evidence," ECON - Working Papers 177, Department of Economics - University of Zurich.
    2. Christoph Mikulaschek & Jacob N. Shapiro, 2018. "Lessons on Political Violence from America’s Post–9/11 Wars," Journal of Conflict Resolution, Peace Science Society (International), vol. 62(1), pages 174-202, January.
    3. Schram, Peter, 2021. "Self-managing terror: Resolving agency problems with diverse teams," Games and Economic Behavior, Elsevier, vol. 130(C), pages 240-257.
    4. Mohamed Abdel Jelil & Kartika Bhatia & Anne Brockmeyer & Quy-Toan Do & CleÌ ment Joubert, 2018. "Unemployment and Violent Extremism: Evidence from Daesh Foreign Recruits," HiCN Working Papers 273, Households in Conflict Network.
    5. Catalina Tejada & Eliana Ferrara & Henrik Kleven & Florian Blum & Oriana Bandiera & Michel Azulai, 2015. "State Effectiveness, Growth, and Development," Working Papers id:6668, eSocialSciences.

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    More about this item

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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