Polarization and Local Conflicts in Post Decentralization Indonesia

Abstract Exploring the hypothesis that socio-economic discrimination contributes to conflict occurrence, we show that the experience of a large country that have gone through a big-bang shift from centralized to decentralized system and introduced direct local elections, confirms the link. Using the case of Indonesia, and by controlling for poverty, demand-induced resource scarcity, and institutional variables, it is revealed that income polarization and inequality at the provincial level explain the occurrence of violent conflict (causing at least 1 death), be it for total or for different types. The results are robust to a series of model specifications. For understanding its impact on conflict, polarization is found more important than income inequality as a measure of socio-economic discrimination.