[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp9526.html
   My bibliography  Save this paper

Terrorism and Employment: Evidence from Successful and Failed Terror Attacks

Author

Listed:
  • Brodeur, Abel

    (University of Ottawa)

Abstract
This paper examines the economic consequences of terror attacks and the channels through which terrorism affects local economies. I rely on an exhaustive list of terror attacks over the period 1970-2013 in the U.S. and exploit the inherent randomness in the success or failure of terror attacks to identify the economic impacts of terrorism. The findings suggest that successful attacks, in comparison to failed attacks, reduce the number of jobs in targeted counties by approximately 5% in the year the attack takes place. The effects fade away after 2 years and I find no evidence that neighboring counties suffer from the successful attack. Analyzing the channels, I find suggestive evidence that the decrease in the physical capital stock of a county partially explains the temporary reduction in jobs. I also focus on economic attitudes and political preferences since these preferences have been shown to be related to economic outcomes. The results suggest that successful attacks decrease temporarily vote share for Democrat candidates in gubernatorial elections and bring a leftward shift in attitudes in targeted counties.

Suggested Citation

  • Brodeur, Abel, 2015. "Terrorism and Employment: Evidence from Successful and Failed Terror Attacks," IZA Discussion Papers 9526, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9526
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp9526.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mirko Draca & Stephen Machin & Robert Witt, 2011. "Panic on the Streets of London: Police, Crime, and the July 2005 Terror Attacks," American Economic Review, American Economic Association, vol. 101(5), pages 2157-2181, August.
    2. Thomas Gries & Tim Krieger & Daniel Meierrieks, 2011. "Causal Linkages Between Domestic Terrorism and Economic Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(5), pages 493-508, June.
    3. Carroll, Christopher D & Fuhrer, Jeffrey C & Wilcox, David W, 1994. "Does Consumer Sentiment Forecast Household Spending? If So, Why?," American Economic Review, American Economic Association, vol. 84(5), pages 1397-1408, December.
    4. Claude Berrebi & Esteban F. Klor, 2004. "On Terrorism and Electoral Outcomes: Theory and Evidence from the Israeli-Palestinian Conflict," Working Papers 4, Princeton University, Department of Economics, Industrial Relations Section..
    5. Patrick T. Brandt & Todd Sandler, 2010. "What Do Transnational Terrorists Target? Has It Changed? Are We Safer?," Journal of Conflict Resolution, Peace Science Society (International), vol. 54(2), pages 214-236, April.
    6. Eric Strobl, 2011. "The Economic Growth Impact of Hurricanes: Evidence from U.S. Coastal Counties," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 575-589, May.
    7. Caggiano, Giovanni & Castelnuovo, Efrem & Groshenny, Nicolas, 2014. "Uncertainty shocks and unemployment dynamics in U.S. recessions," Journal of Monetary Economics, Elsevier, vol. 67(C), pages 78-92.
    8. Timothy Besley & Hannes Mueller, 2012. "Estimating the Peace Dividend: The Impact of Violence on House Prices in Northern Ireland," American Economic Review, American Economic Association, vol. 102(2), pages 810-833, April.
    9. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2007. "Calculating Tragedy: Assessing The Costs Of Terrorism," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 1-24, February.
    10. Klick, Jonathan & Tabarrok, Alexander, 2005. "Using Terror Alert Levels to Estimate the Effect of Police on Crime," Journal of Law and Economics, University of Chicago Press, vol. 48(1), pages 267-279, April.
    11. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    12. Tatyana Deryugina & Laura Kawano & Steven Levitt, 2018. "The Economic Impact of Hurricane Katrina on Its Victims: Evidence from Individual Tax Returns," American Economic Journal: Applied Economics, American Economic Association, vol. 10(2), pages 202-233, April.
    13. Nadir Öcal & Jülide Yildirim, 2010. "Regional effects of terrorism on economic growth in Turkey: A geographically weighted regression approach," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(4), pages 477-489, July.
    14. Pape, Robert A., 2003. "The Strategic Logic of Suicide Terrorism," American Political Science Review, Cambridge University Press, vol. 97(3), pages 343-361, August.
    15. Alan B. Krueger & Jitka Maleckova, 2003. "Education, Poverty and Terrorism: Is There a Causal Connection?," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 119-144, Fall.
    16. John Mueller & Mark G. Stewart, 2014. "Evaluating Counterterrorism Spending," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 237-248, Summer.
    17. Sydney C. Ludvigson, 2004. "Consumer Confidence and Consumer Spending," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 29-50, Spring.
    18. Todd Sandler, 2014. "The analytical study of terrorism," Journal of Peace Research, Peace Research Institute Oslo, vol. 51(2), pages 257-271, March.
    19. Dreher, Axel & Krieger, Tim & Meierrieks, Daniel, 2011. "Hit and (they will) run: The impact of terrorism on migration," Economics Letters, Elsevier, vol. 113(1), pages 42-46, October.
    20. Stefano DellaVigna & Eliana La Ferrara, 2010. "Detecting Illegal Arms Trade," American Economic Journal: Economic Policy, American Economic Association, vol. 2(4), pages 26-57, November.
    21. Walter Enders & Todd Sandler & Khusrav Gaibulloev, 2011. "Domestic Versus Transnational Terrorism: Data, Decomposition, and Dynamics," Journal of Peace Research, Peace Research Institute Oslo, vol. 48(3), pages 319-337, May.
    22. Abadie, Alberto & Dermisi, Sofia, 2008. "Is terrorism eroding agglomeration economies in Central Business Districts? Lessons from the office real estate market in downtown Chicago," Journal of Urban Economics, Elsevier, vol. 64(2), pages 451-463, September.
    23. Walter Enders & Gary A. Hoover & Todd Sandler, 2016. "The Changing Nonlinear Relationship between Income and Terrorism," Journal of Conflict Resolution, Peace Science Society (International), vol. 60(2), pages 195-225, March.
    24. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    25. Louis-Philippe Beland Jr., 2015. "Political Parties and Labor-Market Outcomes: Evidence from US States," American Economic Journal: Applied Economics, American Economic Association, vol. 7(4), pages 198-220, October.
    26. Alberto Abadie, 2006. "Poverty, Political Freedom, and the Roots of Terrorism," American Economic Review, American Economic Association, vol. 96(2), pages 50-56, May.
    27. Abadie, Alberto & Gardeazabal, Javier, 2008. "Terrorism and the world economy," European Economic Review, Elsevier, vol. 52(1), pages 1-27, January.
    28. Arzu Kibris, 2011. "Funerals and Elections: The Effects of Terrorism on Voting Behavior in Turkey," Journal of Conflict Resolution, Peace Science Society (International), vol. 55(2), pages 220-247, April.
    29. José G. Montalvo, 2011. "Voting after the Bombings: A Natural Experiment on the Effect of Terrorist Attacks on Democratic Elections," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1146-1154, November.
    30. Gaibulloev, Khusrav & Sandler, Todd & Sul, Donggyu, 2014. "Dynamic Panel Analysis under Cross-Sectional Dependence," Political Analysis, Cambridge University Press, vol. 22(2), pages 258-273, April.
    31. Timothy Besley & Anne Case, 1995. "Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 769-798.
    32. Benjamin F. Jones & Benjamin A. Olken, 2009. "Hit or Miss? The Effect of Assassinations on Institutions and War," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(2), pages 55-87, July.
    33. Nicholas Bloom, 2009. "The Impact of Uncertainty Shocks," Econometrica, Econometric Society, vol. 77(3), pages 623-685, May.
    34. Glaeser, Edward L. & Shapiro, Jesse M., 2002. "Cities and Warfare: The Impact of Terrorism on Urban Form," Journal of Urban Economics, Elsevier, vol. 51(2), pages 205-224, March.
    35. Tavares, Jose, 2004. "The open society assesses its enemies: shocks, disasters and terrorist attacks," Journal of Monetary Economics, Elsevier, vol. 51(5), pages 1039-1070, July.
    36. Robert T. Greenbaum & Laura Dugan & Gary LaFree, 2007. "The Impact of Terrorism on Italian Employment and Business Activity," Urban Studies, Urban Studies Journal Limited, vol. 44(5-6), pages 1093-1108, May.
    37. Robert B. Barsky & Eric R. Sims, 2012. "Information, Animal Spirits, and the Meaning of Innovations in Consumer Confidence," American Economic Review, American Economic Association, vol. 102(4), pages 1343-1377, June.
    38. Gassebner, Martin & Jong-A-Pin, Richard & Mierau, Jochen O., 2008. "Terrorism and electoral accountability: One strike, you're out!," Economics Letters, Elsevier, vol. 100(1), pages 126-129, July.
    39. Walter Enders & Todd Sandler & Gerald F. Parise, 1992. "An Econometric Analysis of the Impact of Terrorism on Tourism," Kyklos, Wiley Blackwell, vol. 45(4), pages 531-554, November.
    40. Francesco Giavazzi & Michael McMahon, 2012. "Policy Uncertainty and Household Savings," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 517-531, May.
    41. Becker, Gary S. & Rubinstein, Yona, 2011. "Fear and the response to terrorism: an economic analysis," LSE Research Online Documents on Economics 121740, London School of Economics and Political Science, LSE Library.
    42. Rafael Di Tella & Ernesto Schargrodsky, 2004. "Do Police Reduce Crime? Estimates Using the Allocation of Police Forces After a Terrorist Attack," American Economic Review, American Economic Association, vol. 94(1), pages 115-133, March.
    43. Claude Berrebi & Esteban F. Klor, 2006. "On Terrorism and Electoral Outcomes," Journal of Conflict Resolution, Peace Science Society (International), vol. 50(6), pages 899-925, December.
    44. Blomberg, S. Brock & Hess, Gregory D. & Orphanides, Athanasios, 2004. "The macroeconomic consequences of terrorism," Journal of Monetary Economics, Elsevier, vol. 51(5), pages 1007-1032, July.
    45. Walter Enders & Gary A. Hoover, 2012. "The Nonlinear Relationship between Terrorism and Poverty," American Economic Review, American Economic Association, vol. 102(3), pages 267-272, May.
    46. Efraim Benmelech & Claude Berrebi & Esteban F. Klor, 2010. "The Economic Cost of Harboring Terrorism," Journal of Conflict Resolution, Peace Science Society (International), vol. 54(2), pages 331-353, April.
    47. Javier Gardeazabal & Todd Sandler, 2015. "INTERPOL's Surveillance Network in Curbing Transnational Terrorism," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 34(4), pages 761-780, September.
    48. repec:bla:kyklos:v:45:y:1992:i:4:p:531-54 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2010. "The Economics of Terrorism and Counter-Terrorism: A Survey (Part II)," Discussion Papers of DIW Berlin 1050, DIW Berlin, German Institute for Economic Research.
    2. Brodeur, Abel & Yousaf, Hasin, 2019. "The Economics of Mass Shootings," IZA Discussion Papers 12728, Institute of Labor Economics (IZA).
    3. Kis-Katos, Krisztina & Liebert, Helge & Schulze, Günther G., 2014. "On the heterogeneity of terror," European Economic Review, Elsevier, vol. 68(C), pages 116-136.
    4. Michael Jetter & David Stadelmann, 2019. "Terror per Capita," Southern Economic Journal, John Wiley & Sons, vol. 86(1), pages 286-304, July.
    5. Peter Egger & Martin Gassebner, 2015. "International terrorism as a trade impediment?," Oxford Economic Papers, Oxford University Press, vol. 67(1), pages 42-62.
    6. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2015. "The Economics Of Counterterrorism: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(1), pages 131-157, February.
    7. Freytag, Andreas & Krüger, Jens J. & Meierrieks, Daniel & Schneider, Friedrich, 2011. "The origins of terrorism: Cross-country estimates of socio-economic determinants of terrorism," European Journal of Political Economy, Elsevier, vol. 27(S1), pages 5-16.
    8. Adelaja, Adesoji O., 2016. "Agriculture, Inclusive Growth And National Stability:," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 242359, Agricultural and Applied Economics Association.
    9. Kenneth R. Ahern, 2018. "The Importance of Psychology in Economic Activity: Evidence from Terrorist Attacks," NBER Working Papers 24331, National Bureau of Economic Research, Inc.
    10. Ben Bassat Avi & Dahan Momi & Geys Benny & Klor Esteban F., 2012. "The Impact of the Economic Costs of Conflict on Individuals' Political Attitudes," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 18(2), pages 1-29, August.
    11. Chen, Shuai, 2022. "Rally Post-Terrorism," GLO Discussion Paper Series 1065, Global Labor Organization (GLO).
    12. Amarasinghe, Ashani, 2023. "Public sentiment in times of terror," Journal of Development Economics, Elsevier, vol. 162(C).
    13. Sultan Mehmood, 2014. "Terrorism and the macroeconomy: Evidence from Pakistan," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(5), pages 509-534, October.
    14. Khusrav Gaibulloev & Todd Sandler, 2023. "Common myths of terrorism," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 271-301, April.
    15. Fich, Eliezer M. & Nguyen, Tung & Petmezas, Dimitris, 2023. "The effects of terrorist attacks on inventor productivity and mobility," Research Policy, Elsevier, vol. 52(1).
    16. Abadie, Alberto & Dermisi, Sofia, 2008. "Is terrorism eroding agglomeration economies in Central Business Districts? Lessons from the office real estate market in downtown Chicago," Journal of Urban Economics, Elsevier, vol. 64(2), pages 451-463, September.
    17. Andrew E. Clark & Elena Stancanelli, 2016. "Individual Well-Being and the Allocation of Time Before and After the Boston Marathon Terrorist Bombing," PSE Working Papers hal-01302843, HAL.
    18. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2007. "Calculating Tragedy: Assessing The Costs Of Terrorism," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 1-24, February.
    19. Shahbaz, Muhammad & Shabbir, Muhammad Shahbaz & Malik, Muhammad Nasir & Wolters, Mark Edward, 2013. "An analysis of a causal relationship between economic growth and terrorism in Pakistan," Economic Modelling, Elsevier, vol. 35(C), pages 21-29.
    20. Mireille Jacobson & Heather Royer, 2011. "Aftershocks: The Impact of Clinic Violence on Abortion Services," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 189-223, January.

    More about this item

    Keywords

    preferences; growth; terrorism; crime; voting behavior;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp9526. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.