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Terrorism and Employment : Evidence from Successful and Failed Terror Attacks

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  • Abel Brodeur

    (Department of Economics, University of Ottawa, Ottawa, ON)

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 4% 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 that successful attacks affect particularly specific industries such as retail trade, finance and real estate. Last, I use data from the Michigan Survey of Consumers and show that successful attacks increase consumers' level of pessimism for their personal finances, business conditions, and buying conditions.

Suggested Citation

  • Abel Brodeur, 2016. "Terrorism and Employment : Evidence from Successful and Failed Terror Attacks," Working Papers 1619E, University of Ottawa, Department of Economics.
  • Handle: RePEc:ott:wpaper:1619e
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    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. 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).
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    6. Elster, Yael, 2019. "Rockets and votes," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 767-784.
    7. Brodeur, Abel & Yousaf, Hasin, 2019. "The Economics of Mass Shootings," IZA Discussion Papers 12728, Institute of Labor Economics (IZA).
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    9. 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.
    10. 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.
    11. Baccini, Leonardo & Brodeur, Abel & Nossek, Sean & Shor, Eran, 2021. "Terrorism and Voting Behavior: Evidence from the United States," GLO Discussion Paper Series 755, Global Labor Organization (GLO).
    12. Mr. Philip Barrett, 2018. "The Fiscal Cost of Conflict: Evidence from Afghanistan 2005-2016," IMF Working Papers 2018/204, International Monetary Fund.
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    17. Belmonte, Alessandro, 2019. "Selection after terror: Evidence from 30 years of terrorism in South Tyrol," Economics Letters, Elsevier, vol. 179(C), pages 62-65.
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    More about this item

    Keywords

    Crime; Terrorism; Employment; Uncertainty; Consumer Sentiment;
    All these keywords.

    JEL classification:

    • 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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