Income Shocks and Conflict: Evidence from Nigeria

Abstract

This paper examines the relationship between income shocks and conflict across Nigerian states over the 2000s. By matching consumption, production, commodity prices and conflict data, the analysis captures two opposite channels linking agricultural price changes to conflict. Consistently with the opportunity cost mechanism of conflict, price increases of commodities produced by the households have a conflict-reducing effect, while the opposite is true for prices of consumed commodities. The net impact turns out to be conflict inducing in contrast with most of the related literature that focuses on the production side of agricultural price shocks. These results underscore the importance of modelling both production and consumption effects to get consistent estimates of the impact of price changes on conflict.