Work Under Attack: Terrorism and Local Labor Markets

How does terrorism affect labor markets in developing countries? We combine georeferenced data on terrorist incidents with nationally representative employment data from Nigeria to examine this question. Exploiting within-location variation in exposure to terrorist attacks over time, we show that terrorism reduces employment. A one standard deviation increase in exposure lowers the probability of employment by 0.7 percentage points, or roughly 1 percent of average employment, with substantially larger effects for women. Beyond reducing employment, terrorism shifts workers away from regular and cash-paying jobs and lowers employment in sales, services, and unskilled manual occupations. The findings identify labor market disruption as an important economic cost of insecurity in developing countries.