The 7th Annual Frank W. Woods Lecture - Conflict, Inequality and Redistribution
This lecture addressed an age-old question in political economy: does government spending on welfare ensure peace? This question was at the heart of the European Welfare State model of the early 20th century, and remains relevant today in face of rising inequalities and political conflict. Despite a longstanding historical relationship between peace, democracy and the welfare state, few empirical studies to date have analyzed the causal effect of social policies in preventing or reducing political violence, or the type of policies that may be used to mitigate social conflicts and prevent their escalation into widespread violence.
In the lecture, a panel of 12 Latin American countries over the period between 1970 and 2010 was used to show that government welfare spending has led to substantial reductions in political conflict across the region. This effect is more pronounced when associated with reductions in inequality and increasing social and institutional trust. Similar results are obtained for India, the world’s largest democracy, using panel data collected between 1970 and 2011. This body of evidence suggests that, similarly to Europe at the turn of the 20th century, the implementation of adequate welfare programmes may have an important role to play in the establishment and maintenance of peace and stability in many other parts of the world.