TY - JOUR
T1 - Commodity price shocks and civil conflict
T2 - Evidence from Colombia
AU - Dube, Oeindrila
AU - Vargas, Juan F.
N1 - Funding Information:
Notes: CERAC, Conflict Analysis Resource Center; Ag. Ministry, Ministry of Agriculture; DNE, National Department of Drugs; UNODC, United Nations Office of Drug Control; CEDE, Center for the Studies of Economic Development; CEDE-observatory,CEDEdatathatoriginatesfromtheObservatoryofHumanRightsoftheVice-PresidencyofColombia; NFCG, National Federation of Coffee Growers; MME, Ministry of Mines and Energy; Ingeominas, A government agency in charge of mining; USGS, U.S. Geological Survey; ICO, International Coffee Organization; IFS, International Financial Statistics; IMF, International Monetary Fund; US EIA, U.S. Energy Information Administration; GFD, Global Financial Data; DANE, Colombian statistical agency; ENH, Encuesta Nacional de Hogares. The ENH is not a panel and the number of individuals in the sample varies across years. The individual sample listed above refers to working-age individuals (between 14 and 60) that appear in our sample. See Section A.4 in the Appendix for further details.
Copyright:
Copyright 2013 Elsevier B.V., All rights reserved.
PY - 2013/10
Y1 - 2013/10
N2 - How do income shocks affect armed conflict? Theory suggests two opposite effects. If labour is used to appropriate resources violently, higher wages may lower conflict by reducing labour supplied to appropriation. This is the opportunity cost effect. Alternatively, a rise in contestable income may increase violence by raising gains from appropriation. This is the rapacity effect. Our article exploits exogenous price shocks in international commodity markets and a rich dataset on civil war in Colombia to assess how different income shocks affect conflict.We examine changes in the price of agricultural goods (which are labour intensive) as well as natural resources (which are not).We focus on Colombia's two largest exports, coffee and oil. We find that a sharp fall in coffee prices during the 1990s lowered wages and increased violence differentially in municipalities cultivating more coffee. This is consistent with the coffee shock inducing an opportunity cost effect. In contrast, a rise in oil prices increased both municipal revenue and violence differentially in the oil region. This is consistent with the oil shock inducing a rapacity effect.We also show that this pattern holds in six other agricultural and natural resource sectors, providing evidence that price shocks affect conflict in different directions depending on the type of the commodity.
AB - How do income shocks affect armed conflict? Theory suggests two opposite effects. If labour is used to appropriate resources violently, higher wages may lower conflict by reducing labour supplied to appropriation. This is the opportunity cost effect. Alternatively, a rise in contestable income may increase violence by raising gains from appropriation. This is the rapacity effect. Our article exploits exogenous price shocks in international commodity markets and a rich dataset on civil war in Colombia to assess how different income shocks affect conflict.We examine changes in the price of agricultural goods (which are labour intensive) as well as natural resources (which are not).We focus on Colombia's two largest exports, coffee and oil. We find that a sharp fall in coffee prices during the 1990s lowered wages and increased violence differentially in municipalities cultivating more coffee. This is consistent with the coffee shock inducing an opportunity cost effect. In contrast, a rise in oil prices increased both municipal revenue and violence differentially in the oil region. This is consistent with the oil shock inducing a rapacity effect.We also show that this pattern holds in six other agricultural and natural resource sectors, providing evidence that price shocks affect conflict in different directions depending on the type of the commodity.
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U2 - 10.1093/restud/rdt009
DO - 10.1093/restud/rdt009
M3 - Research Article
AN - SCOPUS:84876586047
SN - 0034-6527
VL - 80
SP - 1384
EP - 1421
JO - Review of Economic Studies
JF - Review of Economic Studies
IS - 4
M1 - rdt009
ER -