Does unemployment drive insurgency? That’s a big question that hasn’t been studied much. Despite the lack of data, unfounded assumptions abound. These assumptions are the basis of grand strategic theories to multi-billion $$ counter-insurgency programs (such is the intellectual poverty of US military thinking). One interesting statistical study, Do Working Men Rebel by Eli Berman, Joseph Felter, and Jacob Shapiro (NBER), attempts to answer this question (November 2009).
They conclude that unemployment is actually negatively correlated to insurgency. They posit that the most likely explanation for this is that the government’s counter-insurgency efforts are cheaper/easier to accomplish, since they can buy intel on insurgent locations more easily. The other (less likely) potential conclusion is that high unemployment is an artifact of successful counter-insurgency efforts that restrict movement and increase isolation. In either case, the idea that opportunity costs etc. (the standard theories regarding unemployment and insurgency) drives insurgency doesn’t appear to be valid. Another ancillary conclusion of the paper is that high unemployment typically forces a shift in tactics towards stealth area of effect attacks (IEDs, and other methods that connote relative weakness rather than strength) that produce high levels of collateral damage.