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The Economic Consequences of Forced Displacement

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  • Nathan Fiala

    () (German Institute for Economic Research)

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.

Suggested Citation

  • Nathan Fiala, 2012. "The Economic Consequences of Forced Displacement," HiCN Working Papers 137, Households in Conflict Network.
  • Handle: RePEc:hic:wpaper:137
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    References listed on IDEAS

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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Conflicts and Economic Development
      by Dany Jaimovich - Bakary Baludin in Development Therapy on 2013-03-04 20:32:00
    2. A socio-economic characterization of returnee households in the Nuba Mountains
      by Dany Jaimovich - Bakary Baludin in Development Therapy on 2013-03-15 21:32:00

    Citations

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    Cited by:

    1. Ivan Zilic, 2015. "Effect of forced displacement on health," Working Papers 1503, The Institute of Economics, Zagreb.
    2. Dominic Rohner & Mathias Thoenig & Fabrizio Zilibotti, 2013. "Seeds of distrust: conflict in Uganda," Journal of Economic Growth, Springer, vol. 18(3), pages 217-252, September.
    3. Carlos Bozzoli & Tilman Brück & Tony Muhumuza, 2012. "Movers or Stayers? Understanding the Drivers of IDP Camp Decongestion during Post-Conflict Recovery in Uganda," Discussion Papers of DIW Berlin 1197, DIW Berlin, German Institute for Economic Research.
    4. O’Reilly, Colin, 2015. "Household Recovery from Internal Displacement in Northern Uganda," World Development, Elsevier, vol. 76(C), pages 203-215.
    5. Asha Abdel Rahim & Dany Jaimovich & Aleksi Ylönen, 2013. "Forced displacement and behavioral change: An empirical study of returnee households in the Nuba Mountains," HiCN Working Papers 157, Households in Conflict Network.
    6. Tran, Van Q., 2015. "Household's coping strategies and recoveries from shocks in Vietnam," The Quarterly Review of Economics and Finance, Elsevier, vol. 56(C), pages 15-29.
    7. repec:jku:cdlwps:2015_08 is not listed on IDEAS

    More about this item

    Keywords

    Forced displacement; Economic development; Consequences of displacement;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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