Abstract
While economic sanctions are successful in achieving political goals, can hurt the civilian population. These negative effects could be even more detrimental and long-lasting for future generations. This study estimates the effects of economic sanctions on children’s education by exploiting the United Nations sanctions imposed on Iran in 2006. Using the variation in the strength of sanctions across industries and difference-in-differences with synthetic control analyses, this study finds that the sanctions decreased children’s total years of schooling by 0.1 years and the probability of attending college by 4.8 percentage points. Moreover, households reduced education spending by 58 percent— particularly on school tuition. These effects are larger for children who were exposed longer to the sanctions. The results imply that sanctions have a larger effect on the income of children than their parents. Therefore, ignoring the effects of sanctions on future generations significantly understates their total economic costs.
Highlights
Economic sanctions have become the dening foreign policy tool of the 21st century, sometimes as a prelude to warfare, and sometimes as an alternative to it.1 While humanitarian impacts often feature prominently in the debate about economic sanctions, traditional estimates of the eects of sanctions have mainly focused on the eectiveness of sanctions in achieving political objectives (Ahn and Ludema (2020); Draca et al (2019); Hufbauer et al (2010))
Reduction in children's education will reduce their future earnings such that aected children will experience a larger decline in their earnings than their parents
I analyze the negative externalities of economic sanctions on the generation through changes in children's education
Summary
Economic sanctions have become the dening foreign policy tool of the 21st century, sometimes as a prelude to warfare, and sometimes as an alternative to it. While humanitarian impacts often feature prominently in the debate about economic sanctions, traditional estimates of the eects of sanctions have mainly focused on the eectiveness of sanctions in achieving political objectives (Ahn and Ludema (2020); Draca et al (2019); Hufbauer et al (2010)). There are rich data, Iranian Household Income and Expenditure Surveys (HIES), that roughly span the four decades from the 1980s to 2010s (before, during, and after the sanctions) These surveys collected detailed information on the children's years of schooling and their family income and expenditures including spending on education. The estimated results vary widely (from more than one percentage point per $1,000 to less than one percentage point per $100,000) likely because the research designs (the aected populations, the size, and timing of changes) are dierent (Bulman et al (2021)) Despite dierences, all these papers look at the cases in which the exogenous shock in family income is temporary, in accordance they nd small eects compared to my ndings. EITC studied in Bastian and Michelmore (2018) is an antipoverty program that focuses on families whose incomes lie between 75% and 150% of the poverty line
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