Group Inequality and Conflict: A Simple Model

This paper presents a theoretical model to show how distributional concerns can engender social conflict. We have a two period model, where the cost of conflict is endogenous in the sense that parties involved have full control over the level of conflict they can create. Our analysis highlights the crucial role of future inequality. It is shown equality of assets or income in the current period does not stop conflict from taking place if the anticipated future inequality is significant. Further we find that the impact of inequality on conflict is not straightforward. Since conflict is costly for both groups, societies with low levels of inequality show no conflict, groups engage in conflict only when inequality exceeds a certain threshold level. Additionally the model shows that the link between inequality and conflict may be non-monotonic.