Trade exposure and social cohesion: evidence from Uganda

Vrolijk, Kasper / Gideon Ndubuisi
External Publications (2023)

in: STEG-CEPR Working Paper Series, Structural Transformation and Economic Growth (STEG)

We examine and offer causal evidence on the link between trade exposure and social cohesion using rich micro tax data and a natural experiment of exchange rate liberalization in Uganda. Our results show that exposure to exogenous exchange rate shocks has significant albeit economically small effects on social cohesion: it reduces trust, enhances participation, and has ambiguous effects on identity. These effects operate largely through the expenditure channel (or household exposure) and to a lesser extent through the earnings channel (captured by worker and firm exposure).

About the author

Vrolijk, Kasper

Economy