This paper investigates the relationship between relative deprivation and civil conflict in Nepal between 1995 and 2003. Poverty in Nepal has decreased substantially in this period, which seems puzzling given the political instability and the raise and strengthening of the insurgency. We hypothesize that increasing differences in welfare among different groups - i.e., relative deprivation as opposed to absolute deprivation - can help explain this puzzle. The hypothesis is tested with data from 2 national-
representative household surveys, matched with information regarding mass abductions by the Maoists, obtained from an extensive search of newspaper articles. The identification strategy relies on the fact that the months following finalization of the second round of data collection were characterized by a strengthening of the insurgency. The paper shows that returns to land have increased quite drastically between 1995 and 2003, and disproportionally so for households with relatively large land holdings, resulting in relative deprivation of the (near) landless. Recruiting by Maoists through
abduction of young people is found to be more important in districts where inequality between the landed and the landless has increased