Identity, Economic Mobility and Conflict

The paper provides a theory that explains in what type of societies class conflicts are less frequent than ethnic conflicts. We posit the problem as one of alliance formation. In our model agents can form alliances either in the economic class line or in ethnic line. In case of ethnic alliance, one remains in the same ethnic group before and after the conflict. That is not the case for class identity that can change following an economic shock. Hence, even if someone wins a conflict fighting for one economic class, her class identity may change post-conflict and therefore, may not get the winner’s pay-off. Such uncertainty discourages one to form alliance in the class line when the conflict prize is a private good. Similar issue does not arise in case of ethnic alliance making ethnic conflict a more likely outcome in equilibrium. We extend our model to the case where conflict prize is a group specific public good. We find that class conflict is more likely in the public good case.