1. ¹Department of Economics and Finance, Brunel University, Uxbridge, Middlesex UB8 3PH, UK
2. ²IZA – Institute for the Study of Labour, P.O. Box 7240, D-53072, Bonn, Germany
3. ³William Davidson Institute, University of Michigan, Ann Arbor, MI, USA. E-mail: Sumon.Bhaumik@brunel.ac.uk
4. ⁴Department of Economics, Rutgers University, New Jersey Hall, 75 Hamilton Street, New Brunswick, NJ 08901-1248, USA. E-mail: gang@economics.rutgers.edu
5. ⁵Department of Economics, Tulane University, New Orleans, LA, USA. E-mail: msyun@tulane.edu

Abstract

Despite a significant expansion of the literature on conflicts and fragility of states, only a few systematic attempts have been made to link the theoretical literature on social conflicts to the available micro-level information about the people who are involved in these conflicts. We address this lacuna in the literature using a household-level data set from Kosovo. Our analysis suggests that it is individually rational for competing ethnic communities, Kosovar Albanians and Kosovar Serbs, to resist a quick agreement on a social contract to share the region's resources.