In Search for More: The Importance of Income Inequality in Conflict Formation and Its Policy Implications

Abstract

The paper analyzes the global rise in with-in countries inequality, with special emphasis on the sharp increase in inequality beginning in the 1980s, as a re- sult of the neoliberal policy reforms that were designed to prevent economic stagnation and decline by reiterating the importance of financial deregulation and trade liberalisation. Following this worldwide trend, the paper employs different theoretical frameworks in order to explain how a further increase in income inequality could lead to the formation of violent conflict. By using frustration, identity and opportunity factors, the authors attempt to illustrate how the “search for more” is transformed into violence, followed by mate- rial and human casualties. Finally, the paper analyzes different instruments and policies that could reduce inequality, e.g. tax and transfer systems (the impact on income distribution), labour market policies (the trade-off between high minimal wage and employment reduction) and institutions and education policies (through strengthening public education, in particular). An adequate policy response to rising inequality, according to the authors, should include all of these complementary measures.