 Hi, I'm Zufan Tajudin from the University of Western Sydney, and this is a collaborative work with many people from Smeru Research Institute in Jakarta, Indonesia. Okay, this study is more on country study rather than a specific study on inequality. So to locate the issue in the broader theme of the conference, if you want to see two effects of inequality, one is on the economic side, on the efficiency, growth, economic performance, and then you can think of the effects of inequality on the social side. So on the social side, that's what we mean by the stability here. So stability, we mean the societal stability. When it comes to stability, we don't have the direct measurement of what we mean by social stability. So here we reduce our attention to violent conflict and violent crime as the proxy to measure social stability. Okay, so this is roughly the structure of my presentations. I'll talk briefly what we mean by social stability, and then I'll discuss the issue of the link between inequality and violent conflict, which is quite, which is relatively new, only growing in the past 10, 15 years, not before. I mean the empirical study on inequality and conflict. And then after that, I show you the empirical strategy, results, and conclusions. And if I have time, I'll discuss the implications of the findings. Okay, to situate the, to know more, to be precise about the country that we are talking about. So this is a country study of Indonesia. And Indonesia is a very large country, the fourth most populous country in the world, 20, 250 million people. And my study is not about the whole country, but only selected provinces in the country where the data is available. So the study will cover 12 provinces out of 33 provinces in Indonesia. So the empirical data is in the form of panel data across district in 12 provinces during 2005 and 2012. So eight years of timeframe. Okay, short background of the study. The first one is what happened in Indonesia was since the past 15 years, since the start of democratic transitions and the decentralizations, what we have seen was the increase in inequality. Roughly speaking, from 33 Gini, the Gini index of 33, and now reaching the record high of 41. So from 33 to 41, you can say that around 25% increase in the level of inequality. The starting point was a stable level of inequality during three decades of the authoritarian government of Suharto between mid-60s till late 90s. And after that, after the democratic transitions, what we have seen was that the continuous increase in the level of inequality measured in the Gini coefficients from 33 to 41. That's the first one. The second one is, as I already mentioned before, we need to differentiate between, this is more on policy issue, to differentiate clearly between tackling inequality and poverty reductions. You know that 15 years ago, tackling inequality was not in the mainstream. Inequality has been reduced to simply poverty reductions because in poverty reductions, easy to press the button. Just look at the bottom part of the letter. Because it is hard to look at every segment in the letter. So this was the, but now we have to clearly differentiate those two. The next one is, we need to understand the two effects of inequality. The one has been widely examined on the effect of inequality on economic performance. And this paper is about the effect of inequality on the social stability, just to clearly locate the study. And then why we need to look at the effect of inequality on the social stability, because what we have seen in, during the democratic transitions in Indonesia, the process of democratic transitions was successful. You can say that one in Asia now is the most stable democracy in Southeast Asia, and has been referred as the most, I mean, a case of success story of democratic transitions. When you are referring to the democratization in the Arab world, for example, in Myanmar, or in Thailand, in the, in Philippine. So from that perspective, democratic transition in Asia has been very successful, but the process was quite destabilizing. What I mean by destabilizing was the democratic transitions was accompanied by the outbreak of violent conflict. Okay, I'll show you the data in a moment. So what do we mean by social stability? In the large country and very diverse society like Indonesia, the importance of social stability cannot be overlooked. It has to be monitored. And what we understand was, the two types of collective violence in the forms of separatist violence, some of them reached the level of civil war, and the series of ethnic violence were there, accompanying the process of democratic transitions. Not as bad as a democratic transition in other countries, but I'll show you how significant was the outbreak of violent conflict during the democratic transitions. So I'm referring to the data. Okay, this is the data showing you how the significant increase in violent conflict during the democratic transition between 1998 to say 2002, 2003. But this is not the object of the study. My study is the data on collective violence in Indonesia after the, the chaotic transition has passed. So we are now talking about the data between 2005 and 2012. So the main difference was here, the dominant violence data in Indonesia was dominated by the so-called episodic violence. Ecclesiotic violence means the quality violence in form of separatist violence and ethnic violence concentrated in term of time and in term of locations. We call it episodic. But the dominant pattern of collective violence in Indonesia after 2005, okay, after the dust of democratic transition, the destabilizing effect of transitions has passed. We can see that the one that most dominant is the routine kinds of violence or is routine violence. Routine violence is something routine. You can't really identify the time concentrations and also there is no regional concentration. Spread everywhere and over time. So that's why we call it routine, to differentiate routine and episodic. So this differentiation is really important because we will relate the different types of collective violence and different types of inequality and we have to match the correct type of inequality and the correct type of collective violence. Otherwise we'll get messy results. This is the death data and this is the incidence but you can see the clear pattern. Now, what about the link between inequality and violent conflict? The main contributions of the paper is to clarify between the two types of inequality and two types of violent conflict. So the important things here is, vertical inequality is the type of inequality that is more important with the small scale routine violence while the horizontal inequality is the type of inequality that can explain the episodic violence such as civil war and ethnic conflict. So that's the first main contributions of the paper to clarify the correct type of inequality that can explain the correct types of collective violence. So this is a very short literature review about the link between inequality and conflict. So this is basically the main findings. The first shocking findings about the link between civil war and inequality. So the role of vertical inequality in civil war was dismissed. There is no effect of inequality on civil war and this is based on two most influential cross-country study on civil war. But one by James Farron and David Layton and the other one is from Paul Collier. The role of inequality in civil war is dismissed and significant. So that's, and it was in early 2000s, roughly 10 years ago. But on the other side of the equation, we have Francis Stewart arguing that, or advocating the concept of horizontal inequality. So what matters not vertical inequality but horizontal inequality? And later on, that kind of hypothesis has been systematically supported by cross-country evidence by more recent book by Sederman, Gledisch and Buhauk in 2013, Linking, Horizontal Inequality and Civil War at Cross-Country Level. The book was published by Cambridge University Paris, if I'm not mistaken. So the question now is, what about vertical inequality? Shall we just ignore vertical inequality, okay? Because vertical inequality is the most well-known measure of inequality, not horizontal inequality. There are a lot of disputes about how to measure horizontal inequality, but how to measure vertical inequality is much more advanced. So now we are looking at the role of vertical inequality and the small-scale sporadic routine violence. So the best way to do this kind of taxonomy, you know, to link the correct type of inequality and the correct type of collective violence is not doing the study at cross-country level. But we have to go down into within-country level. So you can clearly differentiate two types of inequality using the same source of data. And the second one is you can clearly differentiate between the episodic violence and the routine violence from the same source of the data. So methodologically speaking, going, moving from cross-country study into within-country study will give you much better results. So this is the empirical strategy. Okay, this is very simple. Violence is functions of inequality and then you put everything you want, okay? So the everything you want is basically one thing. To frame the violence from the opportunity hypothesis. So what kind of opportunity in the society from the socioeconomic terms, that will increase the likelihood of violence. So that's what kind of conditions that will increase the opportunity of collective violence to take place. So that's the basic idea of the opportunity hypothesis. So the other variables is about opportunity hypothesis of collective violence. But our main concern is about the inequality and collective violence. So the coverage of the study is 12th province in Indonesia, but the observation is across districts, between 2005 and 2012. 2005 and 2012. And then the data. This is something that needs to be explained in a bit detail, but I don't have time to go into the detail. But what I can say is this is the best data on collective violence available in Indonesia. So the origins of the data. So the data is developed by the World Bank, now fully absorbed by the Indonesian government into the Indonesian national violence monitoring system. So the system was developed by the World Bank and the World Bank developed a database based on the UNDP sponsored database of collective violence introduced in early 2000s, roughly 10 years ago. So the data that I'm using now between 2005 and 2012 is the World Bank data. The data that I showed you about the collective violence during the democratic transitions was the data from the UNDP sponsored data collections. So the World Bank data is based on the on-sphere data, the UNDP data, but expanded and more sophisticated. So of course there's a kind of improvements in terms of data collections. Yes, I still have plenty of time, okay, no problem. So this is the coverage of the study. 12th province out of 33 provinces in Indonesia. So you can see the spread of the red dots. So what is important about the 12th province? So the 12th province that we are studying now between 2005 and 2012, they are considered as a high conflict areas during the democratic transitions. But the type of violence now in the previously high conflict areas is not about the episodic violence in terms of the serious violence or ethnic violence, but more on the routine violence. So we'll be looking at the effect of vertical inequality on routine violence, mainly that's the main focus of the study. So this is the results, very simple results. The finding is the violence increasing effect of higher inequality. So inequality is bad for social harmony. Inequality is bad for social stability, if you like. That's the first key findings. The second one. This is about considering the multicollinearity and the possible relationship between the independent variables. So the effect of inequality on violence has considered the possible systematic relationship between inequality and income, as postulated by Kusnets. So the Kusnets equation is embedded in the violence regressions, so in the forms of two stage regressions. I'll show you the regressions later on. And the third main finding was, when we find the Kusnets type relationship between income and inequality, we also find the same kind of relationship between violence and income. And this is something new. Because usually in terms of income, the finding was income always has violence reducing effect on violence. So the violence reducing effect of higher income, but in this case we have the infertile U-curve relationships. So this is the summary of the findings. So this is my main regression. But here, Gini is the functions of income. So the Kusnets equations is embedded here. This kind of relationship comes later. Previously we have this kind of relationship, but the problem was, if you don't have this one, hard to connect this two. So how to connect this, the first U-infertile U-curve and the second infertile U-curve. Before this findings was there, we just have the best guess that we can say about how to link those two Kusnets types of relationships. So when we bring the inequality into the picture, we can clearly see. So the process of the upswing of violence when the income goes up, and then the decline of violence when income continues to increase, it's about the inequality. And you have this kind of relationship between inequality and income that create this kind of relationship. So that's roughly the findings. And the findings is detailed in this kind of regression. So I'm not going into detail of this one. So the controls are about the opportunity hypothesis for violence. And we control for the fractionalization based on ethnic fractionalization or religious fractionalizations. And we have the main variables here, Gini coefficient. So here we try the direct relationship between Gini and routine violence, incidence of routine violence without considering the Kusnets types relationship between income and inequality. And you see the funny results. And then the result is more intuitive if you put the functions of the Kusnets relationship here instead of the Gini. So you have here the predict Gini. So here Gini is the functions of income and income squared. And then here we test the Kusnets type relationship between income and violence and where we have the three findings. So this is about routine violence. Now we try to look at ethnic violence, the less dominant type of collective violence. Okay, let me stop. This is the main findings of my digressions. And the findings is more or less consistent if you check with the ethnic violence and also if you use the violent crack. Okay, I'll stop here. Thank you very much.