Terrorism and the Labor Force: Evidence of an Effect on Female Labor Force Participation and the Labor Gender Gap

Abstract

A number of studies have shown a correlational relationship between measures of terrorism and the standing of women in the workforce as measured by female labor force participation. Various studies have proposed theories to explain these associations. Some have concluded that women’s participation in the labor force could be the driver that moves terrorism; others have proposed theories where terrorism and conflict motivate the deviations in the labor force. No study has adequately explored causality and the direction of this association. Using a panel data set of 165 countries and terrorism data from 1980-2007, this paper finds that terrorist attacks decrease female labor force participation and increase the gap between male and female labor force participation. By exploiting variation across countries and time, it is able to identify the effects of terrorism on female labor force participation and the labor gender gap. Furthermore, by using two novel instrumental variable approaches, it identifies a causal link and address endogeneity concerns related to the possibility of transitional development and shifting gender relations inciting terrorism. It finds that, on average, terrorist attacks decrease female labor force participation, ultimately widening the labor gender gap. The results are statistically significant and robust across a multitude of model specifications.