Poverty dynamics and poverty traps among refugee and host communities in Uganda

This paper analyses poverty dynamics and checks for the existence of poverty traps among refugee and host communities living close to each other in Uganda. Although some non-linearities emerge in asset dynamics, there is convergence towards one stable equilibrium for the whole sample that suggests the existence of a structural poverty trap. However, households are quite heterogeneous: when analysing refugees and hosts separately, refugees converge to a lower own-group equilibrium than hosts. The household size, its location, the displacement reason as well as the household’s head gender are correlates of lower equilibria. Panel attrition correction and robustness checks confirm these results. Interestingly, social cohesion positively impacts refugees’ asset accumulation while it generally has a negative impact for hosts. From a policy perspective, structural poverty traps are bad news, because ‘standard’ asset transfers would not unlock the trap. More structural approaches aiming at promoting economic growth in the whole area where refugee and host communities live and targeting both communities are needed.