Inequality and conflict outbreak

Abstract

We model conflict as a multi-prize contest which takes place if a minimum number of players (which we interpret as social classes) reject the status-quo prize distribution. In the event of conflict, the status-quo prizes are reshuffled across players depending on their efforts. We first show that, for a broad family of contest models, equilibrium rent dissipation takes the form of a Generalized Gini coefficient of the prize distribution (also tackling the well-known issue of existence of an equilibrium). Secondly, we show that conflict occurs when inequality is low and deprivation (a concept that we define) is high, where these measures are computed with respect to the prize distribution. Thirdly, we find empirical evidence that supports our predictions using an unbalanced panel of 41 high and middle income countries, taking the number of labor strikes per capita as a proxy for the occurrence of conflict and measuring inequality and deprivation with respect to the income distribution.

International Trade and Stable Resolutions of Resource Disputes

“…17 Vesperoni and Yildizparlak (2019), who explore the importance of inequality in the emergence of (multiprize) conflict, similarly find that greater inequality is more conducive to peace. However, the underlying logic of that paper is different, as it is based on their result (assuming that conflict participation is not constrained by resources) that conflict tends to be more intense and thus more costly (relative to peace that preserves the status quo) when inequality is greater.…”

Difference-form group contests

“…Cubel and Sanchez-Pages (2014), Andonie et al (2019) and Vesperoni and Yıldızparlak (2019), who Footnote 8 continued established links between equilibrium outcomes in contests and the Atkinson index of inequality, the family of Generalized Entropy indices and the Generalized Gini index respectively.…”