Conflict displacement and labor market outcomes in post-war Bosnia and Herzegovina

a r t i c l e i n f o The war in Bosnia and Herzegovina of the early nineties displaced 1.3 million people. This study uses longitudinal data to document the effects of this displacement on labor market outcomes. To account for endogeneity in displacement, I exploit the fact that the level of violence affected the decision to leave and that prewar economic performance is orthogonal to local violence levels. I find that displaced Bosnians are less likely to be working relative to the people who stayed. Displaced men experience higher unemployment levels, and displaced women are more likely to drop out of the labor force. A direct consequence of armed conflict is population displacement. The individuals who are uprooted from their original place of residence are likely to experience stark socioeconomic vulnerability (CIET International, 1997). The unique characteristics of the 1992/95 Bosnia and Herzegovina (BiH) conflict and its devastating consequences on the Bosnians 1 present an analytical opportunity with academic and policy relevance. First, the path of the war was determined by the desire of the Serbs to spatially separate the ethnic groups. Second, the Bosnian civilian population suffered the brunt of the war with 64,036 casualties (or about 3% of the prewar Bosnian population), of whom only 52% were soldiers; in contrast, 24,905 Serbs were killed, of whom 84% were soldiers (Ball et al., 2007). Finally, displacement was widespread — approximately 1.3 million people were displaced and over 1.1 million resettled in BiH after the conflict. The present study documents the labor market effects of displacement in the context of the 1992/95 BiH war. I use longitudinal post-conflict household survey data containing rich information on labor market outcomes, migration status and other individual characteristics to estimate the effect of displacement on labor market outcomes of the Bosnians who left relative to those who stayed. 2 I account for potential endogeneity between displacement and individual labor market outcomes by using instrumental variable (IV) estimation. This analysis contributes to the growing literature on the cost of conflict at the microeconomic level. A number of studies have proposed to measure this cost using micro data. 3 For instance, Blattman (2006) and Shemyakina (2006) find that civil conflicts, in Uganda and Tajikistan respectively, significantly reduced school attendance and grade completion. 4 Bellows and Miguel (2006) empirically explore the link between collective action and exposure to conflict in Sierra Leone. Kondylis …