DP5622 On the Theory of Ethnic Conflict

Author(s): Francesco Caselli , Wilbur John Coleman II

Publication Date: April 2006

Keyword(s): ethnic distance , exploitation

JEL(s): P48 , Q34 , Z13

Programme Areas: International Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP5622.asp

We present a theory of ethnic conflict in which coalitions formed along ethnic lines compete for the economy's resources. The role of ethnicity is to enforce coalition membership: in ethnically homogeneous societies members of the losing coalition can defect to the winners at low cost, and this rules out conflict as an equilibrium outcome. We derive a number of implications of the model relating social, political, and economic indicators such as the incidence of conflict, the distance among ethnic groups, group sizes, income inequality, and expropriable resources.