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

Recent studies have identified correlational associations linking terrorism and females’ standing in the labor market. Theories have been proposed to explain these associations. Some concluded that women’s participation in the labor force could be the driver that moves terrorism; others proposed that terrorism motivates 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 to 2007, we find that terrorist attacks decrease female labor force participation and increase the gender gap between male and female labor force participation. By exploiting variation across countries and time, we are able to identify and quantify these effects; we are also able to address endogeneity concerns by using two novel instrumental variable approaches. The results are statistically significant and robust across a multitude of model specifications.