Mortality Risk and Human Capital Investment: The Legacy of Landmines in Cambodia
Life expectancy plays a key role in determining households' optimal investment in children's human capital accumulation. This paper examines this relationship by looking at a unique case of Cambodia and the nation's prevalence of landmines. Extensive usage of landmines during its long civil conflict since the 1970s was followed by large international effort of landmine clearance operation. A two-fold increase in landmine clearance effort during the periods 2004–2005 in affected areas, has led to a subsequent sharp fall in landmine casualty rates. Together with the male-biased characteristic of landmine accidents, all three variations allow us to estimate the impact of working-age mortality risk on skill formation using a difference-in-difference-in-difference model. To deal with the unobservable, landmine casualty rates are also instrumented by the stock of dangerous land in neighbouring areas. We find a strong negative effect of landmine mortality on both schooling and health investment outcomes. When the mortality risk from such a fearful event as landmine accidents is replaced by a more common incident of traffic accidents, any mortality effect on schooling outcomes is no longer detected. This is evidence of a role played by subjective life expectation in optimal decision making on the households.