Does Income Inequality Lead to Terrorism? Evidence from the Post-9/11 Era

Abstract

We study the influence of income inequality on terrorism. Using cross-national data for 79 countries for the 2002-2012 period, we show that endogeneity matters to the inequalityterrorism relationship, e.g., because of the distributional effects of terrorism. Once endogeneity is properly accounted for by means of an instrumental-variable approach, higher levels of income inequality result in more terrorist activity. This finding is robust to different definitions of the dependent variable, different estimation techniques and different instruments for income inequality. Our finding that inequality fuels terrorism is consistent with relative deprivation theory which argues that conflict results from frustration over the actual distribution of economic resources within a society. JEL Classification: C36, D74

Globalization and terror in Africa

“…The GMM technique is employed subsequently. It is important to note that Krieger and Meierrieks (2015) have used instruments to address the potential concern of endogeneity, which they found not be so large. Given that variables of interest are different in this study on the one hand and on the other hand, the level of aggregated data (i.e.…”

Fighting Terrorism in Africa When Existing Terrorism Levels Matter

“…Linkages between inclusive development and terrorism can be classified in three main categories. First, the theory of relative deprivation developed by Gurr (1970) documents some interesting insights into the relationship between exclusive development and political violence (Krieger & Meierrieks, 2015;. Considering that 'relative deprivation'…”

“…For instance, limited politico-economic and socio-economic development can further grease terrorism. (1) The perspective of politico-economic participation revolves around the political influence of social groups in shaping institutions for distribution within society and access by social groups to resources (Krieger & Meierrieks, 2015). Within a framework where power is held by a few people, these can mobilize enough resources with which to create and/or consolidate politico-economic institutions that promote and protect their vested interests.…”

“…(1) There is yet no firmly established consensus on the relationship between inequality and civil wars "Over the past few years, prominent large-N studies of civil war seem to have reached a consensus that inequality does not increase the risk of civil war" (Østby, 2008, p. 143). Still, some studies maintain that civil wars are more likely in countries that are characterized by high inequality (Cederman et al, 2011;Baten & Mumme, 2013;Krieger & Meierrieks, 2015). (2) As concerns the relationship between terrorism and inequality, empirical evidence is also very conflicting.…”

“…Our empirical approach has two main distinctive features. On the one hand, contrary to highlighted studies (based on OLS and logistic regressions for example), the study controls for endogeneity by employing non-contemporary and instrumental variable regressions because Krieger and Meierrieks (2015) have recently documented that it is difficult to establish expected signs of policy variables without accounting for endogeneity with an instrumental variable approach. On the other hand, terrorism dynamics are regressed on policy variables throughout the conditional distributions of terrorism dynamics.…”