Fiscal Incentives for Conflict: Evidence from India's Red Corridor

Jacob Shapiro and Oliver Vanden Eynde
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Jacob Shapiro: Princeton University

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Abstract: Can tax regimes shape the incentives to engage in armed conflict? Indian mining royalties benefit the States, but are set by the central government. India's Maoist belt is mineral-rich, and States are responsible for counter-insurgency operations. We exploit the introduction of a 10% ad valorem tax on iron ore that increased royalty collections of the affected states by a factor of 10. We find that the royalty hike was followed by a significant intensification of violence in districts with important iron ore deposits. The royalty increase was also followed by an increase in illegal mining activity in iron mines.

Keywords: Counterinsurgency; Civil Conflict; Public Goods Provision (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-dev
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02921132v2
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Related works:
Working Paper: Fiscal Incentives for Conflict: Evidence from India's Red Corridor (2023)
Working Paper: Fiscal Incentives for Conflict: Evidence from India's Red Corridor (2023)
Working Paper: Fiscal incentives for conflict: Evidence from India’s Red Corridor (2021)
Working Paper: Fiscal Incentives for Conflict: Evidence from India's Red Corridor (2020)
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