Quantifying the Microeconomic Effects of War Using Panel Data: Evidence From Nepal

The extensive coverage of household surveys in conflict regions in recent decades has fueled a growing literature on the microeconomic effects of war. In this paper, we use a unique panel dataset to quantify the impact of the Nepalese civil conflict on schooling attainment. Given longitudinal data, we are able to directly estimate unobserved individual heterogeneity and thus address selective wartime displacement. Despite the widely-held view that war is detrimental to human capital formation, we find no effect of war intensity on schooling attainment once unobserved individual heterogeneity is accounted for. We draw on supplementary data to explain our findings.