Roland Hodler

We conjecture that mistrust and social conflict in a society may depend on ethnic stratification, i.e., the extent to which the hierarchy in socio-economic positions across individuals follows ethnolinguistic lines. We define and axiomatically characterize an index of ethnic stratification that generalizes the idea of between-group inequality to situations where data on economic and ethnolinguistic distances between pairs of individuals is available. We use Afrobarometer survey data to measure ethnic stratification at the level of towns and villages in 26 ethnically diverse African countries. We find that ethnic stratification is negatively related to trust in relatives, neighbors and other acquaintances, and positively related to nearby conflicts. These findings shed new light on the debate about the merits of conflict and contact theory.

Cross-country studies on the economic consequences of internal political violence typically find short-run effects that are not very large, and no evidence for full economic recovery. We study the economic impact of the Rwandan genocide in 1994, which has been one of the most intense events of political violence since World War II. More precisely, we estimate its effect on economic development using the synthetic control method and addressing data quality issues that have been a concern in the literature. We find a 58% decrease in GDP in 1994. This effect still corresponds to a decrease in GDP per capita of around 31% when taking into account that 800,000 people were killed and that around two million fled the country during the genocide. We further provide strong evidence that Rwanda’s economy was then catching up with the estimated counterfactual GDP it would have had in absence of the genocide, with the gap closing after 17 years. When focusing on the effects on the Rwandan exports as reported by the importing countries, we find similar short-run effects but somewhat slower recovery. We finally show that agriculture was less severely hit by the genocide than the industry and service sectors, and that it also recovered much more quickly.