Middleman Minorities and Ethnic Violence: Anti-jewish Pogroms in Eastern Europe

Abstract: We present evidence to reconcile two seemingly contradictory observations: on the one hand, minorities often choose middleman occupations, such as traders and moneylenders, to avoid competition with the majority and, as a consequence, avoid conflict; on the other hand, middleman minorities at times do become the primary target of persecution. Using panel data on anti-Jewish pogroms in Eastern Europe between 1800 and 1927, we document that ethnic violence breaks out when crop failures coincide a sharp increase in uncertainty about the future. In contrast, in times of relative political stability, negative economic shocks do not instigate violence against middleman minorities. This suggests that violence against middleman minorities breaks out when discounted value of future services of middlemen for majority falls due to an increase in discount rates. We show that pogroms primarily affected localities where Jews dominated the credit sector as opposed to any other intermediary profession, including trade in agricultural goods, suggesting that it is not the middlemen nature of the Jewish occupations per se that pogroms during the intersection of economic and political crises, but the long-term character of the lending transactions such that resolution of uncertainly takes place in the interim of a transaction.