Violent conflict and inequality

This paper analyses the distributive impacts of internal violent conflicts, in contrast to previous literature which has focused on the effects of inequality on conflict. We use cross-country panel data for the time period 1960–2014 to estimate war-related changes in income inequality. Our results indicate rising levels of inequality during war and especially in the early period of post-war reconstruction. The return of inequality to pre-war levels may take up to four decades after the end of conflict. However, we find that this rise in income inequality is not permanent. While inequality peaks around 5 years after the end of a conflict, it declines again to pre-war levels within the end of the first post-war period. Lagged effects of conflict and only subsequent adjustments of redistributive policies in the period of post-war reconstruction seem to be valid explanations for these patterns of inequality. A series of alternative specifications confirms the main findings of the analysis.