published in: Journal of the European Economic Association, 2021, 19 (1), 1-37
To address security concerns, governments often implement trade barriers and restrictions on the movement of goods and people. These restrictions have negative economic consequences, possibly increasing the supply of political violence. To test this hypothesis, we exploit the restrictions imposed by Israel on imports to the West Bank as a quasi-experiment. In 2008 Israel started enforcing severe restrictions on the import of selected dual-use goods and materials, de facto banning a number of production inputs from entering the West Bank.
We show that after 2008 (i) output and wages decrease in those manufacturing sectors that use those materials more intensively as production inputs, (ii) wages decrease in those localities where employment is more concentrated in these sectors, and (iii) episodes of political violence are more likely to occur in these localities. Our calculations suggest these effects account for 18% of the violent political events that occurred in the West Bank from 2008 to 2014.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.