Is there a relationship between inequality and terrorism? Evidence from a semi-parametric approach

Abstract

Understanding links between income inequality and terrorism is crucially important for social scientists. The current empirical literature suggests that this relationship is positive but inconclusive. In this paper we use a semi-parametric approach to model the relationship between inequality and terrorism, in order to identify nonlinearities in the relationship. We use top income percentile shares as our measure of inequality in response to the inequality measurement literature identifying problems with the Gini. We find that after controlling for explanations of terrorism other than inequality, the positive relationship between inequality and terrorism discussed in the existing empirical literature is very weakly evident. We also find that the semi-parametric model crucially exposes the nonlinear nature of the relationship between inequality and terrorism. The results are different for developed and developing countries. We find that the relationship between inequality and terrorism is nonlinear and at most weakly positive for developed countries, with a slightly stronger positive relationship for developing and middle-income countries.