World War II. They find that individuals who were 10 years old during the conflict, or were more directly involved through their parents in Germany and Austria, received less education than individuals with comparable characteristics in Switzerland and Sweden. Affected individuals also experience a sizable earnings loss, some 40 years later. Blattman and Annan (2010) use the exogeneity in child military conscriptions into rebel groups in Uganda to provide evidence of widespread and persistent economic and educational impact of conflicts. They find that schooling falls by nearly a year, that skilled employment halves, and that earnings drop by a third among child soldiers as compared to the control group.

Conflicts affect aggregate productivity directly through physical health but also indirectly through mental health. Being exposed to violence leads to post-traumatic stress disorder (PTSD) which affects both adults and children. These mental illnesses are characterized by hyper-vigilance, flashbacks and nightmares. Individuals who are exposed to a traumatic event have an increased likelihood of poor self-reported health, morbidity (as indicated by physical exam or laboratory tests), utilization of medical services, and mortality. Li et al. (2011) show that people who experience PTSD are at much higher risk of developing other health problems, including diabetes, heart ailments, depression and addiction. Sibai et al. (1989) study civilians exposed to the civil war in Lebanon and find that patients with severe coronary artery disease had more war-related stress than did either patients with normal arteriographic findings or hospital visitors. Using female Vietnam veterans, Wolfe et al. (1994) show that warzone exposure and PTSD are associated with self-reports of poor health and numerous physical problems. PTSD in early childhood also makes people more vulnerable in later life (Economist, ed, 2015).

Rosen and Fields (1988) were among the first to attempt to explain how PTSD could adversely affect physical health. The potential channels can be divided in 3 groups: biological, psychological and behavioral channels (Friedman and Schnurr, 1995). From a biological point of view, PTSD can modify cardiovascular reactivity, disturb sleep physiology, enhance thyroid function, etc. The psychological channels include depression, hostility, and poor coping capacity. The behavioral ones include poor health habits such as smoking and drinking.<sup>30</sup> For the rest of this section, we treat all these effects as a persistent loss in human capital due to pre-adulthood exposure to conflicts. We first propose a measure of aggregate health loss in labor productivity based on pre-adulthood exposure of workers to conflict, that uses the existing micro estimates and combines them with the labor force composition (which share of labor force experienced violence at a given age before adulthood). We also explore how this measure correlates with output in a macro framework and whether it is consistent with micro level estimates of returns to health in the literature.

> 30A review of how PTSD could adversely affect physical health can be found in Friedman and Schnurr (1995).

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