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An Evaluation of Does Economic Inequality Breed Political Conflict?

Introduction We study Hindu-Muslim conflict in post-Independence India through the lens of economics. We allow for two channels that link economics to conflict. Under the first, Hindu-Muslim violence is the systematic use of Ray is grateful for funding from the National Science Foundation ðSES-1261560Þ and the Fulbright Foundation and for hospitality from the Indian Statistical Institute during a year of leave from New York University. Thanks to Abhijit Banerjee, V. Bhaskar, Sam Bowles, Sugato Dasgupta, Oeindrila Dube, Joan Esteban, Mukesh Eswaran, Raji Jayaraman, David Ludden, Michael Manove, Kalle Moene, Andrew Oswald, and Rohini Pande for useful discussions and to Steve Wilkinson for granting us access to a data set on religious conflict. ðData are provided as supplementary material online.Þ We thank Jay Dev Dubey for his able research assistance. We are grateful to five anonymous referees for their valuable comments. We particularly thank coeditor Jesse Shapiro, who went beyond the call of duty in [ Journal of Political Economy, 2014, vol. 122, no. 4] © 2014 by The University of Chicago. All rights reserved. 0022-3808/2014/12204-0005$10.00 719 This content downloaded from 128.122.149.145 on Tue, 9 Sep 2014 10:18:07 AM All use subject to JSTOR Terms and Conditions a particular marker ðreligion, in this caseÞ for appropriating economic surplus, either directly through resource grabbing or looting or indirectly through exclusion from jobs, businesses, or property. Under the second, existing intergroup hatreds are reignited or exacerbated by economic progress within one of the groups. Both approaches have the same formal representation, which makes robust predictions regarding the effect of group incomes on intergroup violence. We examine these predictions empirically. The recurrent episodes of Hindu-Muslim conflict in India ðgoing back to the partition and earlierÞ form the motivation for this paper. Even if we exclude the enormity of human losses from religious violence during the partition, such conflict has continued through the second half of the twentieth century, accounting for over 7,000 deaths over 1950–2000. There is reason to believe that the situation may not have changed much since: witness, for instance, the rampant Hindu-Muslim violence unleashed in the Indian state of Gujarat in 2002. It may be argued that these numbers are small relative to the overall population of India. From a pure arithmetical perspective they are, but they do not capture the less measurable consequences of conflict: displacement, insecurity, segregation, loss of livelihood, widespread fear, and the sapping of the morale of an entire society