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‘Living’ wage, class conflict and ethnic strife

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  • Indraneel Dasgupta

Abstract

We examine how group-specific differences in reservation wage, arising due to asymmetries in social entitlements, impact on 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.

Suggested Citation

  • Indraneel Dasgupta, "undated". "‘Living’ wage, class conflict and ethnic strife," Discussion Papers 08/08, University of Nottingham, CREDIT.
  • Handle: RePEc:not:notcre:08/08
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    Cited by:

    1. repec:kap:pubcho:v:174:y:2018:i:3:d:10.1007_s11127-018-0506-8 is not listed on IDEAS
    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. Soumyanetra Munshi, 2014. "Student Politics: A Game-Theoretic Exploration," Working Papers id:6309, eSocialSciences.
    4. Indraneel Dasgupta & Ranajoy Guha Neogi, 2018. "Between-group contests over group-specific public goods with within-group fragmentation," Public Choice, Springer, vol. 174(3), pages 315-334, March.
    5. Indraneel Dasgupta & Ravi Kanbur, 2011. "Does philanthropy reduce inequality?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(1), pages 1-21, March.
    6. Arnab Basu, 2013. "Impact of rural employment guarantee schemes on seasonal labor markets: optimum compensation and workers’ welfare," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(1), pages 1-34, March.
    7. Bakshi, Dripto & Dasgupta, Indraneel, 2016. "Identity Conflict with Cross-Border Spillovers," IZA Discussion Papers 9731, Institute for the Study of Labor (IZA).
    8. Dasgupta, Indraneel & Mukherjee, Diganta, 2014. "Assimilation, Criminality and Ethnic Conflict," IZA Discussion Papers 7924, Institute for the Study of Labor (IZA).
    9. Bakshi, Dripto & Dasgupta, Indraneel, 2015. "A Model of Dynamic Conflict in Ethnocracies," IZA Discussion Papers 9159, Institute for the Study of Labor (IZA).
    10. Soumyanetra Munshi, 2014. "Student politics: A Game-theoretic exploration," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-047, Indira Gandhi Institute of Development Research, Mumbai, India.

    More about this item

    Keywords

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

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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