Essays on the economics of conflict

Hönig, Tillman (2021) Essays on the economics of conflict. PhD thesis, London School of Economics and Political Science.

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Abstract

This thesis explores the economic consequences of violent conflict in two African countries: Sierra Leone and Nigeria. The first chapter establishes that civil war in Sierra Leone has important local economic effects. Almost twenty years after the end of the war, greater conflict intensity in a chiefdom leads to a higher share of agricultural workers, fewer educated workers and lower income. In order to explicitly account for general equilibrium effects such as selective migration in response to the war, the second chapter develops an economic geography model. The model sheds light on different mechanisms through which conflict affects aggregate income: Changes in education, firm productivity and individual productivity have both direct effects on income and indirect effects by changing the allocation of labor across sectors and locations. Changes in amenities also affect the spatial allocation of labor. I leverage the structure of the model along with observed income information and migration flows to identify firm productivities, amenities and average individual productivities. The model is used to perform counterfactual simulations. Aggregate income in Sierra Leone is estimated to be 32% lower today as a result of the civil war. Importantly, despite having received little attention in conflict research so far, firm productivity losses can explain most of the decrease. Selective migration in response to the war also seems to play an important role and implies that local reduced-form effects are misleading when trying to estimate aggregate effects. The third chapter exploits a peace policy that the Nigerian government implemented in the Niger Delta region in 2009 to evaluate the effects of conflict reduction. I construct a synthetic control region from the states that are not part of the Niger Delta region and therefore unaffected by the policy as a withincountry counterfactual to the Niger Delta region. I find that peace following the policy increased household expenditures by 19% four years later. Uncovering potential mechanisms behind this economic upturn, I find an increase in selfemployment income by 67% and in education by 0.5 years of schooling. In line with the findings from Sierra Leone, these results highlight the important link between conflict and business activity.

Item Type:	Thesis (PhD)
Additional Information:	© 2021 Tillman Hönig
Library of Congress subject classification:	H Social Sciences > HB Economic Theory J Political Science > JA Political science (General)
Sets:	Departments > Economics
Supervisor:	Besley, Timothy
URI:	http://etheses.lse.ac.uk/id/eprint/4290

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