Most aid spending by governments seeking to rebuild social and political order is based on an opportunity-cost
theory of distracting potential recruits. The logic is that gainfully employed young men are less likely
to participate in political violence, implying a positive correlation between unemployment and violence
in places with active insurgencies. We test that prediction on insurgencies in Iraq and the Philippines,
using survey data on unemployment and two newly- available measures of insurgency: (1) attacks
against government and allied forces; and (2) violence that kills civilians. Contrary to the opportunity-cost
theory, we find a robust negative correlation between unemployment and attacks against government
and allied forces and no significant relationship between unemployment and the rate of insurgent attacks
that kill civilians.