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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 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 reservation wage workers. The latter however benefit, employers and 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.

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  • Indraneel Dasgupta, 2009. "'Living' wage, class conflict and ethnic strife," Post-Print hal-00722792, HAL.
    • Handle: RePEc:hal:journl:hal-00722792
    DOI: 10.1016/j.jebo.2009.07.009
    Note: View the original document on HAL open archive server: https://hal.science/hal-00722792
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    Cited by:

    1. 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.
    2. Jay Pil Choi & Subhasish M. Chowdhury & Jaesoo Kim, 2016. "Group Contests with Internal Conflict and Power Asymmetry," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(4), pages 816-840, October.
    3. Dripto Bakshi & Indraneel Dasgupta, 2018. "A model of dynamic conflict in ethnocracies," Defence and Peace Economics, Taylor & Francis Journals, vol. 29(2), pages 147-170, February.
    4. Soumyanetra Munshi, 2014. "Student Politics: A Game-Theoretic Exploration," Working Papers id:6309, eSocialSciences.
    5. Bakshi, Dripto & Dasgupta, Indraneel, 2021. "Internal versus External Rent-Seeking with In-Group Inequality and Public Good Provision," IZA Discussion Papers 14871, Institute of Labor Economics (IZA).
    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. Soumyanetra Munshi, 2019. "Jaw–jaw and war–war: a game-theoretic exploration of violence in electoral politics," Indian Economic Review, Springer, vol. 54(2), pages 203-237, December.
    8. Dasgupta, Indraneel & Mukherjee, Diganta, 2014. "Assimilation, Criminality and Ethnic Conflict," IZA Discussion Papers 7924, Institute of Labor Economics (IZA).
    9. Dripto Bakshi & Indraneel Dasgupta, 2021. "Internal vs. external rent-seeking with in-group inequality and public good provision," Discussion Papers 2021-06, University of Nottingham, CREDIT.
    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.
    11. Dasgupta, Indraneel & Pal, Sarmistha, 2021. "Touch thee not: Group conflict, caste power and untouchability in rural India," Journal of Comparative Economics, Elsevier, vol. 49(2), pages 442-466.
    12. 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.
    13. Dripto Bakshi & Indraneel Dasgupta, 2020. "Identity Conflict with Cross-Border Spillovers," Defence and Peace Economics, Taylor & Francis Journals, vol. 31(7), pages 786-809, October.

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    More about this item

    Keywords

    O17; D31; D72; D74; I38; J52; O17.; Class conflict; Ethnic conflict; Living wage; Labour regulation; Social entitlement; Affirmative action; Distribution;
    All these keywords.

    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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