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Terrorism and Employment: Evidence from Successful and Failed Terror Attacks

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  • 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
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    Cited by:

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    2. Kamada, Takuma, 2020. "The Emergence of the Crack Epidemic and City-to-Suburb Mobility Between and Within Ethno-Racial Groups," SocArXiv wkxqv, Center for Open Science.
    3. Besley, Timothy & Fetzer, Thiemo & Mueller, Hannes, 2019. "Terror and Tourism: The Economic Consequences of Media Coverage," CAGE Online Working Paper Series 449, Competitive Advantage in the Global Economy (CAGE).
    4. Elisa Borghi & Michela Braga & Francesco Scervini, 2020. "Fear of the dark: How terrorist events affect trust in the long run," BAFFI CAREFIN Working Papers 20149, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    5. Andrew E. Clark & Orla Doyle & Elena Stancanelli, 2017. "The Impact of Terrorism on Well-being: Evidence from the Boston Marathon Bombing," Working Papers 201717, School of Economics, University College Dublin.
    6. Jetter, Michael, 2017. "Terrorism and the Media: The Effect of US Television Coverage on Al-Qaeda Attacks," IZA Discussion Papers 10708, Institute of Labor Economics (IZA).
    7. Belmonte, Alessandro, 2019. "Selection after terror: Evidence from 30 years of terrorism in South Tyrol," Economics Letters, Elsevier, vol. 179(C), pages 62-65.
    8. Libertad González Luna & Tetyana Surovtseva, 2020. "Do more tourists promote local employment?," Economics Working Papers 1746, Department of Economics and Business, Universitat Pompeu Fabra.
    9. Bove, Vincenzo & Efthyvoulou, Georgios & Pickard, Harry, 2019. "Did terrorism affect the Brexit vote?," CAGE Online Working Paper Series 415, Competitive Advantage in the Global Economy (CAGE).
    10. Brodeur, Abel & Yousaf, Hasin, 2019. "The Economics of Mass Shootings," IZA Discussion Papers 12728, Institute of Labor Economics (IZA).
    11. Mr. Philip Barrett, 2018. "The Fiscal Cost of Conflict: Evidence from Afghanistan 2005-2016," IMF Working Papers 2018/204, International Monetary Fund.
    12. Michael Jetter, 2017. "Mediated Terrorism: US News and Al-Qaeda Attacks," CESifo Working Paper Series 6804, CESifo.
    13. Ummad Mazhar, 2021. "Women empowerment and insecurity: firm-level evidence," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 56(1), pages 43-53, January.
    14. Cust,James Frederick & Mensah,Justice Tei, 2020. "Natural Resource Discoveries, Citizen Expectations and Household Decisions," Policy Research Working Paper Series 9372, The World Bank.
    15. Elster, Yael, 2019. "Rockets and votes," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 767-784.
    16. Clark, Andrew & Stancanelli, Elena, 2017. "Americans’ Responses to Terrorism and Mass-Shooting: Evidence from the American Time Use Survey and Well-Being Module," GLO Discussion Paper Series 26, Global Labor Organization (GLO).
    17. Čižmešija Mirjana & Lukač Zrinka & Novoselec Tomislav, 2019. "Nonlinear optimisation approach to proposing novel Croatian Industrial Confidence Indicator," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 5(2), pages 17-26, December.
    18. Akay, Alpaslan & Bargain, Olivier & Elsayed, Ahmed, 2020. "Global terror, well-being and political attitudes," European Economic Review, Elsevier, vol. 123(C).
    19. Peri, Giovanni & Rees, Daniel I. & Smith, Brock, 2020. "Terrorism, Political Opinions, and Election Outcomes: Evidence from Europe," IZA Discussion Papers 13090, Institute of Labor Economics (IZA).
    20. Brodeur, Abel & Wright, Taylor, 2019. "Terrorism, immigration and asylum approval," Journal of Economic Behavior & Organization, Elsevier, vol. 168(C), pages 119-131.
    21. Willem Vanlaer & Samantha Bielen & Wim Marneffe, 2020. "Consumer Confidence and Household Saving Behaviors: A Cross-Country Empirical Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 147(2), pages 677-721, January.

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    More about this item

    Keywords

    crime; terrorism; growth; preferences; 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 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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