The Long-Run Labor-Market Consequences of Civil War: Evidence from the Shining Path in Peru

Abstract

This study exploits district-level variation in the timing and intensity of civil war violence to investigate whether early life exposure to civil wars affects labor-market outcomes later in life. In particular, we examine the impacts of armed conflict in Peru, a country that experienced the actions of a tenacious, brutally effective war machine, the Shining Path, between 1980 and 1995. This study finds that the most sensitive period to early life exposure to civil war violence is the first 36 months of life. A 1 standard deviation increase in civil war exposure leads to a 5% fall in adult monthly earnings, 3.5% reduction in the probability of working in formal jobs, and 6% reduction in the probability of working in large firms. Substantial heterogeneity in the earnings impacts emerges when considering variation in the type of civil war violence. Overall, forced disappearances emerge as the most hurtful measure of violence in the long run. Sexual violations disproportionately affected the wages of women, while torture and forced disappearances disproportionately affected the wages of men. Evidence on intervening pathways suggests that short-run health along with schooling and household wealth are important channels in connecting early life exposure to civil war and adult earnings.