The Impact of Peace: Evidence from Nigeria

This paper studies the consequences of peace – or conversely, conflict – on four outcomes on fundamental economic relevance: Education, health, self-employment income and household expenditures. While the empirical literature on the consequences of conflict involving cross-country regression studies may deliver suggestive big picture evidence on links between conflict and economic outcomes, establishing causation remains problematic. By contrast, my study builds on the rather recent micro-empirical literature and proposes to use a natural experiment in Nigeria to evaluate the consequences of a reduction of conflict. The amnesty policy implemented by the Nigerian government in the Niger Delta Region in 2009 is used as a policy shock to assess the effect of a conflict reduction on the outcomes of interest. Using a constructed synthetic control region from the states that are not part of the Niger Delta region and therefore unaffected by the policy as a within-country counterfactual to the Niger Delta region, the natural experiment setting enables me to interpret the results causally and estimate the peace benefits the amnesty policy generated. I find that peace through the amnesty policy generated an increase in education by 0.53 years of schooling, a 67% increase in self-employment income and a 19% increase in household expenditures four years later.