by Joseph-Simon Goerlach and Marco Alfano
We examine how terrorism alters the demand for education through perceived risks and returns by relating terrorist attacks to media and schooling in Kenya. Exploiting geographical and temporal variation in wireless signal coverage and attacks, we establish that media access reinforces negative effects of terrorism on schooling. Detailed data on media content confirm this channel and show a negative relation between mentions of terrorism and schooling only for households with media signal coverage. Based on these insights, we estimate a simple structural model where households experiencing terrorism form beliefs about risks and returns to education. We exploit the same quasi-experimental variation in signal coverage and attacks, and their effect on schooling and child labour to identify how media change subjective expectations. We find that households with media access expect significantly higher fatality risks along with lower returns to education, and consequently suffer sizable life-time earnings losses.