Abstract:

We study the welfare and market effects of a 20% cut in cash assistance, affecting 279,000 refugees in one of the world's largest camps, in Kenya. Using high-frequency household data with randomized survey timing and weekly price data, we find sharp declines in food consumption, dietary diversity, food security, and expenditure. Informal credit markets collapsed, forcing households to deplete assets. Food prices fell, consistent with demand-side adjustments in a semi-closed economy. These price effects partly attenuated adverse impacts on households. Our study shows that aid cuts affect recipients not only directly but also indirectly through general-equilibrium effects on local markets.

Full Article: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5270846