The paper examines the impact of Kakuma refugee camp in Kenya on the economic welfare of host populations in the Turkana region. Using nighttime lights data as a proxy for economic activity, the authors show that refugee inflows have positive but very localized impacts on economic activity, i.e. host populations within a 10 km distance from the camp. The authors estimate that luminosity effects correspond to a 5.5 percent increase in consumption for every 10 percent increase in the refugee population. They also observe that household consumption within 10 km of the camp is 25 percent higher than in areas further away. Based on the available data the authors infer two mechanisms driving the positive impact on economic activity: (1) increased availability of new employment, i.e. proximity to the refugee camp is associated with more low skill jobs and wage labor, particularly for households with secondary education, and this effect dominates the impact of any labor competition from refugees; and (2) price changes in agricultural and livestock markets that are favorable to local producers, i.e. agriculture occurs almost exclusively close to the refugee camp, and livestock prices are positively correlated with high refugee and aid presence. The results show average effects only and so mask important heterogeneity, e.g. some households may not be able to access employment opportunities due to age or educational attainment, or may not be able to farm or raise sufficient numbers of livestock and so are negatively impacted by price increases.
Do Refugee Camps Help or Hurt Hosts? The Case of Kakuma, Kenya
Jennifer Alix-Garcia, Sarah Walker, Anne Bartlett, Harun Onder and Apurva Sanghid
Journal of Development Economics, Volume 130 (2018) Pages 66-83