The International Campaign to Ban Landmines production and use estimates that there are more than 80 billion landmines in the ground in more than 80 countries. Despite the scale of the problem and large investments by OECD countries to clear mines in low income countries, the economic consequences of landmine contamination have been so far unexamined by economists working on the economics of wars, perhaps due to the lack of data thus far. Using unique data from Cambodia, this paper estimates the effect of landmine contamination on human capital. These effects are identified using difference-in-differences (DD) and instrumental variables (IV) estimators. In the DD framework I exploit two sources of variation in an individual’s exposure to the conflict: her age in 1970 due to the spread of landmines over time and landmine contamination intensity in her district of birth. The IV specification uses the distance to the Thai border as an exogenous source of variation in landmine contamination intensity. The IV estimate indicates a education loss of 0.4 years at the mean and no visible effect on earnings. I discuss three factors that probably drive down the returns to education in post-war Cambodia: (1) The downgrading of educated people during the Khmer rouge regime (2) Direct Effects of landmines on the returns to education (3) the destruction of physical capital and technological delay through capital-skill complementarity.
Year: 2006 HiCN Working Paper No. 025