Economics Speaker Series: The Intergenerational Effects of Economic Sanctions

A talk by Dr. Safoura Moeeni (PhD), assistant professor of economics at the University of Regina. This event is hosted by the University of Saskatchewan Department of Economics.

Date: Wednesday, Jan. 20
Time: 3 pm
Location: Online via Webex

Free and open to the public

Join online: https://usask.webex.com/usask/j.php?MTID=m32b03e082f772293722870051f9f2789

The Intergenerational Effects of Economic Sanctions

by Dr. Safoura Moeeni (PhD)

Economic sanctions have become the defining foreign policy tool of the 21st century. While sanctions are successful in achieving political goals, can hurt the civilian population. A large literature has documented the negative welfare effects of sanctions on current generations, but these effects could be even more detrimental and long-lasting for future generations. This paper quantifies the effects of the United Nations Security Council sanctions imposed on Iran in 2006 on investment in children's education. Exploiting variation in the strength of sanctions across industries and using difference-in-difference with synthetic control analyses, I obtain two main findings. First, the sanctions decreased children's total years of schooling by 0.1 years and the probability of attending college by 4.8 percentage points. This effect is larger for children at crucial ages and children from low-wealth families. Second, households reduced expenditure on children's education by 58%—particularly on expenditure for school tuition. This finding indicates households respond to the sanctions by substituting away from higher-quality private schools towards lower-quality public schools for their children. This negative effect on education expenditure is larger for children from middle-wealth families. The sanctions' impact on children's education is larger than implied by the income elasticity estimates from the previous literature likely because sanctions have persistent effects on parent income. Taken together the results imply that sanctions have a larger effect on the permanent income of children than their parents. Therefore, ignoring the effects of sanctions on future generations significantly understates their total economic costs.

Info: economics.dept@usask.ca