Research

Theoretically, the welfare effects of cash-based assistance depend on how businesses respond to the demand shock and on resulting effects on prices. Such market effects have been largely overlooked in the literature. In this study, we examine the business and price effects of cash-based assistance to refugees in Kenya. Monthly restricted cash transfers worth 3 to 13 dollars were provided to 400,000 refugees in the form of digital money exclusively usable for food purchases at licensed shops. We show that licensed businesses have much higher revenues (+175%) and profits (+154%) and charge higher prices than unlicensed businesses. In line with theory, the restricted cash transfer program created a parallel retail market in which a limited number of businesses enjoy high market power. The theoretical and empirical results provide a cautionary tale highlighting the drawbacks of setting up a less competitive, parallel market to distribute cash-based assistance.

Mental health and economic outcomes are closely related, with both having the potential to impact the other. However, for vulnerable populations, there is little rigorous evidence on this relationship and how to improve both dimensions of wellbeing. We examine these questions in a particularly challenging context: Refugee settlements in Northern Kenya. Displaced populations face exceptionally high rates of mental health conditions due to traumatic experiences, challenging living situations, and uncertainty, among many other reasons, while their access to mental health services is low. At the same time, they often face numerous hardships including a lack of economic opportunities, vulnerability to shocks, and poverty. We evaluate how mental health and economic wellbeing are impacted by a program bundle, including (1) a psychosocial training and (2) an unconditional cash transfer of about USD 520. We find that even a light-touch training can be effective in significantly improving symptoms of common mental health conditions in an underserved population with high rates of depression. While these improvements through the training do not translate into improvements in economic outcomes in the challenging environment of a refugee camp, the cash transfer substantially improves a range of economic wellbeing indicators. Cash transfer impacts are concentrated in outcomes related to basic needs, improving food security and access to healthcare. For those with better mental health at baseline, it further improves labor market outcomes. Finally, while the cash transfer does not impact symptoms of mental health conditions, it improves positive psychological outcomes related to resilience and a positive outlook to the future.

Globally, approximately 850 million people lack official identification documents, with populations living in fragile and conflict-affected contexts disproportionately affected. This ‘identity gap’ perpetuates cycles of poverty and exclusion by preventing access to formal employment, financial services, education, healthcare, and government services. This study examines the impact of integrating refugees into Ethiopia’s national digital ID program ‘Fayda’, which provides them with a form of government ID that is valid and well known across the country. Implementing a randomized controlled trial with 2,800 refugee households, we will assess the causal impact of receiving a Fayda ID on economic and social integration, and examine how these impacts vary across demographic characteristics and vulnerability profiles.