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The True Cost of War

Author

Listed:
  • Artuc,Erhan
  • Gomez Parra,Nicolas
  • Onder,Harun

Abstract

Measuring the economic impact of a war is a daunting task. Common indicators like casualties,infrastructure damages, and gross domestic product effects provide useful benchmarks, but they fail to capture thecomplex welfare effects of wars. This paper proposes a new method to estimate the welfare impact of conflicts andremedy common data constraints in conflict-affected environments. The method first estimates how agents regardspatial welfare differentials by voting with their feet, using pre-conflict data. Then, it infers a lower-boundestimate for the conflict-driven welfare shock from partially observed post-conflict migration patterns. A casestudy of the conflict in Eastern Ukraine between 2014 and 2019 shows a large lower-bound welfare loss for Donetskresidents equivalent to between 7.28 and 24.79 percent of life-time income depending on agents’ time preferences.

Suggested Citation

  • Artuc,Erhan & Gomez Parra,Nicolas & Onder,Harun, 2022. "The True Cost of War," Policy Research Working Paper Series 10217, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10217
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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