TY  - JOUR
AU  - Benmelech,Efraim
AU  - Berrebi,Claude
AU  - Klor,Esteban F.
TI  - The Economic Cost of Harboring Terrorism
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15465
PY  - 2009
Y2  - October 2009
UR  - http://www.nber.org/papers/w15465
L1  - http://www.nber.org/papers/w15465.pdf
N1  - Author contact info:
Efraim Benmelech
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-4462
Fax: 847/491-5719
E-Mail: e-benmelech@kellogg.northwestern.edu

Claude Berrebi
The Federmann School of
Public Policy and Government
Hebrew University
Mount Scopus
Jerusalem ISRAEL 91905
E-Mail: Claude_Berrebi@rand.org

Esteban Klor
Dept. of Economics
Hebrew University
Mount Scopus
Jerusalem ISRAEL 91905
E-Mail: eklor@mscc.huji.ac.il
AB  - The literature on conflict and terrorism has paid little attention to the economic costs of terrorism for the perpetrators. This paper aims to fill that gap by examining the economic costs of committing 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, we identify and quantify the impact of a successful attack on unemployment and wages. We 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 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.
ER  -