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The Economic Cost of Harboring Terrorism

Author

Listed:
  • Efraim Benmelech

    (Department of Economics, Harvard University, Cambridge, MA, USA, effi_benmelech@harvard.edu)

  • Claude Berrebi

    (RAND Corporation, Santa Monica, CA, USA)

  • Esteban F. Klor

    (Department of Economics, Hebrew University, Jerusalem, Israel)

Abstract

The literature on conflict and terrorism has paid little attention to the economic costs of terrorism for the perpetrators. This article aims to fill that gap by examining the economic costs of harboring suicide terror attacks. Using data covering the universe of Palestinian suicide terrorists during the second Palestinian uprising, combined with data from the Palestinian Labor Force Survey, the authors identify and quantify the impact of a successful attack on unemployment and wages. They find robust evidence that terror attacks have important economic costs. The results suggest that a successful attack causes an increase of 5.3 percent in unemployment, increases the likelihood that the district’s average wages fall in the quarter following an attack by more than 20.0 percent, and reduces the number of Palestinians working in Israel by 6.7 percent relative to its mean. Importantly, these effects are persistent and last for at least six months after the attack.

Suggested Citation

  • 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.
  • Handle: RePEc:sae:jocore:v:54:y:2010:i:2:p:331-353
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    References listed on IDEAS

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    1. Jaeger, David A. & Klor, Esteban F. & Miaari, Sami H. & Paserman, M. Daniele, 2012. "The struggle for Palestinian hearts and minds: Violence and public opinion in the Second Intifada," Journal of Public Economics, Elsevier, vol. 96(3), pages 354-368.
    2. Benmelech, Efraim & Berrebi, Claude & Klor, Esteban F, 2010. "Economic Conditions and the Quality of Suicide Terrorism," CEPR Discussion Papers 7995, C.E.P.R. Discussion Papers.
    3. Hartog,Joop & Maassen van den Brink,Henriëtte (ed.), 2007. "Human Capital," Cambridge Books, Cambridge University Press, number 9780521873161, May.
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    7. Eric D. Gould & Esteban F. Klor, 2010. "Does Terrorism Work?," The Quarterly Journal of Economics, Oxford University Press, vol. 125(4), pages 1459-1510.
    8. Efraim Benmelech & Claude Berrebi, 2007. "Human Capital and the Productivity of Suicide Bombers," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 223-238, Summer.
    9. B. Peter Rosendorff & Todd Sandler, 2004. "Too Much of a Good Thing?," Journal of Conflict Resolution, Peace Science Society (International), vol. 48(5), pages 657-671, October.
    10. Claude Berrebi & Esteban F. Klor, 2010. "The Impact of Terrorism on the Defence Industry," Economica, London School of Economics and Political Science, pages 518-543.
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    Citations

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    Cited by:

    1. Massimiliano Calì & Sami H. Miaari, 2012. "The labour market impact of mobility restrictions: Evidence from the West Bank," HiCN Working Papers 130, Households in Conflict Network.
    2. Brodeur, Abel, 2015. "Terrorism and Employment: Evidence from Successful and Failed Terror Attacks," IZA Discussion Papers 9526, Institute for the Study of Labor (IZA).
    3. David A. Jaeger & Esteban F. Klor & Sami H. Miaari & M. Daniele Paserman, 2015. "Can Militants Use Violence to Win Public Support? Evidence from the Second Intifada," Journal of Conflict Resolution, Peace Science Society (International), vol. 59(3), pages 528-549, April.
    4. Etkes Haggay, 2012. "The Impact of Employment in Israel on the Palestinian Labor Force," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 18(2), pages 1-36, August.
    5. Claude Berrebi & Esteban F. Klor, 2011. "Does Harboring Terrorists Have Economic Costs?," EUSECON Policy Briefing 12, DIW Berlin, German Institute for Economic Research.
    6. Efraim Benmelech & Claude Berrebi & Esteban Klor, 2010. "Counter-Suicide-Terrorism: Evidence from House Demolitions," NBER Working Papers 16493, National Bureau of Economic Research, Inc.
    7. Caruso Raul & Klor Esteban F., 2012. "Political Economy Studies on the Israeli-Palestinian Conflict: Introduction," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 18(2), pages 1-10, August.
    8. Benmelech, Efraim & Berrebi, Claude & Klor, Esteban F, 2010. "Economic Conditions and the Quality of Suicide Terrorism," CEPR Discussion Papers 7995, C.E.P.R. Discussion Papers.
    9. Jetter, Michael, 2017. "Terrorism and the Media: The Effect of US Television Coverage on Al-Qaeda Attacks," IZA Discussion Papers 10708, Institute for the Study of Labor (IZA).
    10. Claude Berrebi & Esteban F. Klor, 2012. "Do Poor Economic Conditions Affect Terrorism?," EUSECON Policy Briefing 15, DIW Berlin, German Institute for Economic Research.
    11. 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.
    12. Michael Jetter, 2017. "Mediated Terrorism: US News and Al-Qaeda Attacks," CESifo Working Paper Series 6804, CESifo Group Munich.
    13. Francesco Amodio & Leonardo Baccini & Michele di Maio, "undated". "Security, Trade, and Political Violence," HiCN Working Papers 250, Households in Conflict Network.
    14. Etkes, Haggay, 2011. "The impact of employment in Israel on the Palestinian labor force (2005–08)," MPRA Paper 34681, University Library of Munich, Germany.

    More about this item

    Keywords

    economic costs; suicide terrorism; harboring;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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