How Do Firms Respond to Insecurity?
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:
(March 2020) |
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Abstract:
We provide new evidence on how insecurity affects firm behavior by linking data on violent conflict in Afghanistan to geo-stamped corporate mobile phone records. We begin by developing a method for observing firm location choice with phone data, and validate these measurements using independent sources of administrative and survey data. Next, we show that deadly terrorist attacks reduce the presence of firms in affected districts by 4-6%. The effect is driven by both an increase in the local exit of existing firms following attacks and a decrease in new firm entry. We find large negative spillovers from attacks in provincial capitals on firm presence in nearby rural districts. After violence, employees in provincial capitals are 33% more likely to move to Kabul and 15% more likely to leave for another province, with strongest effects when employees experience violence outside of their firm's primary district of operation.
We provide new evidence on how insecurity affects firm behavior by linking data on violent conflict in Afghanistan to geo-stamped corporate mobile phone records. We begin by developing a method for observing firm location choice with phone data, and validate these measurements using independent sources of administrative and survey data. Next, we show that deadly terrorist attacks reduce the presence of firms in affected districts by 4-6%. The effect is driven by both an increase in the local exit of existing firms following attacks and a decrease in new firm entry. We find large negative spillovers from attacks in provincial capitals on firm presence in nearby rural districts. After violence, employees in provincial capitals are 33% more likely to move to Kabul and 15% more likely to leave for another province, with strongest effects when employees experience violence outside of their firm's primary district of operation.