Civil conflict with rising wages and increasing state capacity: Theory and application to the Maoist insurgency in India

Abstract

The Indian government's response to the Maoist insurgency has largely been in line with the prevailing view in political science and economics, that conflict becomes less likely with an increase in wages and an increase in state capacity. There is evidence from India and other countries that this may not always be the case. In this paper I present a game-theoretic model of conflict over a natural resource demonstrating some mechanisms through which rising wages and increasing state capacity could have the opposite effect, i.e. they may lead to civil conflict. The implication regarding wage is tested on district level data on conflict and agricultural wage from six Indian states that are affected by the Maoist insurgency. The results support the model's implication and are robust to different specifications.

Bio-data

Anand teaches economics at the School of Liberal Studies, Azim Premji University. He has a PhD in Economics from the University of Cambridge. His PhD dissertation was titled "Conflict, riots and welfare: Essays on political economy and public finance in India". His research interests lie in the fields of Political Economy, Development Economics and Applied Microeconomics.