The impact of psychological trauma on wages in post-conflict Bosnia and Herzegovina

In the last three decades, armed conflict has increasingly been fought among civilian populations, resulting in greater physical and mental tolls. Soldiers returning from combat with psychological trauma are now receiving medical and policy attention for reintegration into the workforce. However, there is little attention on the impacts and options available to civilians who may face similar problems achieving labor force success after exposure to war-related trauma. Using the Bosnia and Herzegovina Living Standards Measurement Survey for years 2001–2004, we study wage attainment for 7659 respondents in relation to a series of psychological trauma measures which correspond to those used in PTSD diagnosis. In standard OLS regression, all subcomponents of PTSD have a negative impact; however, once unobserved individual heterogeneity is taken into account, some of the individual elements of psychological trauma have positive impacts on wage attainment. This is one of the first studies to find evidence of Posttraumatic Growth using information beyond psychometric instruments. The impact of the PTSD condition itself is insignificant in both models, and we do not find evidence of selection bias. We determine that the traditional means of predicting wages in labor economics are relevant in a post-conflict environment.