Despite the increasing prevalence of armed conflicts, there is limited understanding of how individuals secure their lives under external threats. This paper addresses this gap by examining the impact of armed conflicts on the income privatization of kibbutzim in Israel. Originally equal-sharing settlements, kibbutzim have started paying differential salaries to members. A model is developed, arguing that equal-sharing enhances collective defense in conflict environments, whereas income privatization occurs as external threats diminish. Using rainfall at nearby refugee camps, instrumental variable estimates show that local conflicts explain most of the variation in the timing of income privatization. • Collective communities equal share income to solve the free-rider problem in local defense. • Income privatization occurs as external threats diminish. • Evidence based on the local conflict intensity for 223 Israeli kibbutzim from 1989 to 2014. • Defensive institutions help civilians survive conflicts.
Liang Diao (Fri,) studied this question.