Insecurity and Firm Location Choice:
Evidence from Afghan Corporate Phone Records
with Josh Blumenstock, Tarek Ghani, Ethan Kapstein, Thomas Scherer, and Ott Toomet
Evidence from Afghan Corporate Phone Records
with Josh Blumenstock, Tarek Ghani, Ethan Kapstein, Thomas Scherer, and Ott Toomet
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Most Recent Version:
(November 2019) |
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Abstract:
We provide new evidence on how insecurity affects firm location choice by linking data on violent outbreaks in Afghanistan to geo-stamped corporate mobile phone records. We first show that phone data can be used to measure the activity of private firms and validate our approach with administrative and survey data for 2,306 Afghan firms. Next, we find that major terrorist attacks reduce the presence of firms in targeted districts by 4-6%. The effect is driven by both an increase in the exit of existing firms following attacks as well as a decrease in entry of new firms. We find evidence of regional heterogeneity and spillovers whereby responses to attacks are largest in provincial capitals and pill over into surrounding rural districts. Employees in provincial capitals are 33% more likely to move to Kabul and 15% more likely to leave for another province when exposed to attacks. Finally, our results are heterogeneous by firm size. Larger firms show greater responsiveness to attacks, with implications for the composition of firms operating in districts affected by insecurity.
We provide new evidence on how insecurity affects firm location choice by linking data on violent outbreaks in Afghanistan to geo-stamped corporate mobile phone records. We first show that phone data can be used to measure the activity of private firms and validate our approach with administrative and survey data for 2,306 Afghan firms. Next, we find that major terrorist attacks reduce the presence of firms in targeted districts by 4-6%. The effect is driven by both an increase in the exit of existing firms following attacks as well as a decrease in entry of new firms. We find evidence of regional heterogeneity and spillovers whereby responses to attacks are largest in provincial capitals and pill over into surrounding rural districts. Employees in provincial capitals are 33% more likely to move to Kabul and 15% more likely to leave for another province when exposed to attacks. Finally, our results are heterogeneous by firm size. Larger firms show greater responsiveness to attacks, with implications for the composition of firms operating in districts affected by insecurity.