Working Paper: CEPR ID: DP14366
Authors: Laura Panza; Eik Swee
Abstract: We examine the effect of inter-ethnic income inequality on conflict intensification in Mandate Palestine, using a novel panel dataset comprising district-level characteristics and conflict intensity across 18 districts during 1926-1945. We instrument Jewish-Arab income inequality by combining the annual variation in rainfall shocks with cross-sectional variation in pre-Mandate crop intensity, to extract exogenous changes in inequality between non-agrarian Jews and agrarian Arabs. We find a substantial e ect of inequality on conflict intensification, especially during periods where the relationship between Arabs and Jews were particularly strained. Our estimates are driven by Arab-initiated attacks, reflecting the local average treatment effects of Arab farmers who move from agrarian work to violence in response to adverse rainfall shocks; in other words, economic shocks coupled with existing economic segregation facilitate the transition into violence when opposing groups are economic substitutes. Further investigations suggest that inequality-driven violence was most likely an expression of resentment, rather than the result of opportunity costs or appropriation
Keywords: interethnic violence; income inequality; mandate Palestine
JEL Codes: N45; N35; D74
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| conflict intensification (D74) | Jewish-Arab income inequality (D31) |
| economic inequality (D31) | conflict through grievance-based mechanisms (D74) |
| Jewish-Arab income inequality (D31) | conflict intensification (D74) |
| adverse rainfall shocks (Q54) | Jewish-Arab income inequality (D31) |
| economic shocks + existing economic segregation (R23) | transition into violence (D74) |