The Effect of Terrorism on Employment and Consumer Sentiment: Evidence from Successful and Failed Terror Attacks
- American Economic Journal: Applied Economics (Forthcoming)
This paper examines the economic consequences of terror attacks by exploiting the inherent randomness in the success or failure of terror attacks. The findings suggest that successful attacks, in com- parison to failed attacks, reduce the number of jobs and total earnings in targeted counties by approximately 2 percent in the years following the attack. Analyzing the channels, I find that successful attacks affect, in particular, specific industries such as housing. Last, I show that successful attacks receive more media coverage and increase levels of consumer pessimism in terms of business conditions and buying conditions.
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