The Intergenerational Effects of Economic Sanctions

Abstract

While economic sanctions are successful in achieving political goals, they can hurt the civilian population. These negative effects could be even more detrimental and long lasting for future generations. This study estimates the effects of economic sanctions on children’s education by exploiting the United Nations sanctions imposed on Iran in 2006. Using the variation in the strength of sanctions across industries and difference-in-differences with synthetic control analyses, this study finds that the sanctions decreased children’s total years of schooling by 0.1 years and the probability of attending college by 4.8 percentage points. Moreover, households reduced education spending by 58 percent—particularly on school tuition. These effects are larger for children who were exposed to the sanctions for longer. The results imply that sanctions have a larger effect on the income of children than their parents. Therefore, ignoring the effects of sanctions on future generations significantly understates their total economic costs.

The Labor Market Returns to Unobserved Skills: Evidence from a Gender Quota

“…These changes affected the Iranian economy much earlier and are likely to affect both control and treated cohorts similarly. Moreover, as Moeeni (2022) shows, the effect of the sanctions on educational outcomes are not different across gender.…”

Trade sanctions and informal employment

“…Studies investigating the effects of international economic sanctions on the economy of the sanctioned state document significant negative effects on GDP growth (Hufbauer et al 2009;Neuenkirch and Neumeier 2015), international trade (Afesorgbor 2019; Haidar 2017), foreign direct investment (FDI) (Mirkina 2018), employment (Etkes and Zimring 2015; Moghaddasi Kelishomi and Nisticò 2022), and human capital (Chakravarty et al 2021;Moeeni 2022). There is also evidence that sanctions lead to increases in poverty and inequality (Afesorgbor and Mahadevan 2016;Neuenkirch and Neumeier 2016) and in corruption and illicit economic activities (Andreas 2005;Bove et al 2021;Crozet et al 2021;Farzanegan 2013;Slavov 2007).…”

“…Studies document that sanctions increase the criminalization of the state, economy, and civil society of both the target country and its neighbours, fostering illegal economic activities, such as smuggling (Andreas 2005;Bove et al 2021;Crozet et al 2021;Farzanegan 2013;Slavov 2007). There is also evidence that sanctions reduce gross domestic product (GDP) growth and increase poverty (Ghomi 2022;Laudati and Pesaran 2022;Neumeier 2015, 2016), and have also detrimental effects on human capital (Chakravarty et al 2021;Moeeni 2022), firms' performance (Ahn and Ludema 2020), and formal employment (Etkes and Zimring 2015;Moghaddasi Kelishomi and Nisticò 2022). However, to the best of our knowledge no study has yet investigated the impact of trade sanctions on workers' probability of being employed off the books.…”

International sanctions and climate finance in developing countries

“…However, the imposition of international sanctions reduces the chances of many people gaining easy access to education (Moeeni, 2022). They limit the financial resources available to education systems, particularly in terms of school supplies and equipment, making learning more difficult for pupils and teachers (Hwami, 2022).…”