Refugee-host proximity and market creation in Uganda

Uganda currently hosts more than 1.4 million refugees and the relationship with the host population is complex. In this paper, we investigate the effect of the interactions between refugee and host-communities by using a unique dataset and by exploring a broad range of economic outcomes – such as employment opportunities, sources of income, agriculture production, and enterprises. We use the distance between refugee and host communities to measure the degree of interaction. To deal with potential endogeneity issues, we adopt an instrumental variable approach and carry out several robustness tests. We find positive effects on individual participation in paid employment and on household wage income. Discarding the role of assistance, we suggest that these positive effects can be driven by refugees’ economic activities. However, the market creation is localized.