Poverty Dynamics and Poverty Traps among Refugee and Host Communities in Uganda

Abstract

This paper analyses poverty dynamics and checks for the existence of poverty traps among refugee and host communities living close to each other in Uganda. Although some non-linearities emerge in asset dynamics, there is convergence towards one stable equilibrium for the whole sample that suggests the existence of a structural poverty trap. However, households are quite heterogeneous: when analysing refugees and hosts separately, refugees converge to a lower own-group equilibrium than hosts. The household size and education are asset growth enablers for both communities. Noticeably, access to land, past history and social cohesion are also significant correlates of refugees’ asset dynamics. From a policy perspective, structural poverty traps are bad news, because standard anti-poverty interventions would not unlock the trap. Our results stress the need of more structural approaches aimed at promoting economic growth in the whole area where refugee and host communities live, targeting both communities.