Inequality and violent conflict: new evidence from selected provinces in Post-Soeharto Indonesia

Economic inequality in Indonesia has been on the rise and, during 2011-2014, reached a historic high of 0.41 measured in terms of Gini index of household consumption expenditure. Not only economically, the issue of rising inequality is also socially and politically important as it may harm societal stability, especially in a large, diverse and young democracy plagued by widespread poverty and vulnerability amid rising expectations. This study finds empirical supports for the violence increasing effects of higher inequality across districts in provinces usually considered as 'high conflict' regions. The econometric results are robust after controlling for province and time effects, ethnic and religious fractionalisations and series of usual determinants of violence, as well as across different measures of violence. This new evidence implies that it is important to include tackling inequality as an explicit focus in the development agenda at the national as well as sub-national levels.