Published in:Centro Studi Luca d'Agliano Development Studies Working Paper ; No. 379
Extent:
1 Online-Ressource (62 p)
Language:
English
DOI:
10.2139/ssrn.2573120
Identifier:
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 2014 erstellt
Description:
This paper investigates the effect of conflicts on firms' output value and input misallocation in the context of Palestine during the Second Intifada. Using a unique establishment-level dataset, we firms' outcomes and input usage over time across districts experiencing differential changes in conflict intensity. We show how conflict diminishes the total and per-worker value of firms' output through the distortions it generates in firms' access to input markets. In particular, lack of access to the market for imported material inputs leads firms to adjust input usage accordingly, substituting domestically produced materials for imported ones. We also empirically identify the relative amount of conflict-induced input distortions. Furthermore, we find that conflict affects disproportionally more those sectors which were more intensive in imported materials and had higher average output value in pre-conflict years. Conflict is thus shown to be particularly harmful for the most productive sectors of the economy