Income shocks and social unrest: theory and evidence

Combining theoretical and empirical work, this paper explores the impact of economic shocks on the incidence of social unrest (i.e., mass demonstrations and violent riots) in autocracies. Our theory predicts negative economic shocks to boost unrest since-in bad times-fighting the regime to reduce the level of resource diversion becomes cheaper. Using a new dataset on political instability in Africa, our empirical analysis confirms this prediction. The instrumental variables estimates-which take into account the potential endogeneity of economic shocks-suggest a significant increase in the level of social unrest as a response to a decline in real per capita GDP.