The Economic Consequences of Forced Displacement

Nathan Fiala

No 137, HiCN Working Papers from Households in Conflict Network

Abstract: Currently, nearly 44 million people around the world are forcibly displaced. This displacement is due to a number of factors, including weather shocks in New Orleans and Indonesia and conflict in Afghanistan and Libya. Researchers have posited that the effect of this movement has led to severe impacts on the populations, but due to estimation and data difficulties, little is known about the causal impact of this movement on livelihoods. This paper presents the first causal evidence of the effect of displacement. A panel data set on households and communities near a conflict zone in northern Uganda offers the opportunity to exploit a discontinuity design in order to minimize endogenous determinants of displacement and obtain plausibly unbiased estimates of the immediate and postdisplacement impact of displacement on civilians. I find that displaced households experienced an initial decrease in consumption of between 28% and 35%, as well as a 1/2 standard deviation decrease in the value of assets compared to nondisplaced households. Two years after households returned home, displaced households still lag behind nondisplaced households with 20% lower consumption, and a 1/5 standard deviation less assets. However, as predicted by a heterogeneous neoclassical growth model, displaced households in the top three quartiles of predisplacement assets appear to have recovered a portion of their consumption, though with significantly reduced education and wealth levels. There is no recovery for the bottom quartile households, who appear to be trapped in a lower equilibrium.

Keywords: Forced displacement; Economic development; Consequences of displacement (search for similar items in EconPapers)
JEL-codes: O15 O20 O55 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2012-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Economic Consequences of Forced Displacement (2015)
Working Paper: Economic Consequences of Forced Displacement (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hic:wpaper:137

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