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Social Choice and Welfare

, Volume 53, Issue 1, pp 135–173 | Cite as

Inequality and conflict outbreak

  • Alberto VesperoniEmail author
  • Anıl Yıldızparlak
Original Paper
  • 96 Downloads

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.

Notes

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Faculty of Economics and Computer Science, Institute of EconomicsAlpen-Adria University KlagenfurtKlagenfurtAustria
  2. 2.Department of EconomicsDurham University Business SchoolDurhamUK

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