Terrorism and Employment: Evidence from Successful and Failed Terror Attacks

Abel Brodeur

No 9526, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: preferences; growth; terrorism; crime; voting behavior (search for similar items in EconPapers)
JEL-codes: C13 D72 D74 P16 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2015-11
New Economics Papers: this item is included in nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published - published as 'The Effect of Terrorism on Employment and Consumer Sentiment: Evidence from Successful and Failed Terror Attacks' in: American Economic Journal: Applied Economics, 2018, 10 (4), 246-82

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Related works:
Journal Article: The Effect of Terrorism on Employment and Consumer Sentiment: Evidence from Successful and Failed Terror Attacks (2018)
Working Paper: Terrorism and Employment: Evidence from Successful and Failed Terror Attacks (2016)
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