Earthquakes and terrorism: the long lasting effect of seismic shocks

The literature on the effect of shocks on civil conflicts has grown rapidly over the last decade. In this paper, we study the relationship between earthquakes and terrorism. In the short run, the destruction generated by a medium-range earthquake reduces the opportunity cost of rebelling against the government. Since destruction of infrastructures in these cases is limited, the state keeps most of its coercive capacity, which reduces the chances of full-fledged conflict but leaves open the possibility of low intensity rebellious acts such as terrorism. In the medium run the destruction of tangible assets can lead to the closing down of weak firms, the introduction of new technologies, the improvement of productivity and the increase in wealth inequality We propose a new algorithm to classify terrorism events as domestic or transnational, and show that the likelihood of a domestic terrorist event increases with the previous occurrence of an earthquake. Using earthquakes as an instrument for income, we also show that development has a positive and significant effect on the likelihood of terrorist events.Financial supportfrom the European Research Council under the European Community ERC Grant Agreement n.647514, the Spanish National Science Foundation ECO2017-82696-P, and the Government of Catalonia (ICREA and 2017SGR616) is gratefully acknowledged. We are also thankful for the financial support provided by the Spanish Ministry of Economy and Competitiveness, through the Severo Ochoa Programme for Centres of Excellence in R&D (SEV-2015-0563) and the Ramon Areces Foundation