Externe Publikationen

Trade exposure and social cohesion: evidence from Uganda

Vrolijk, Kasper / Gideon Ndubuisi
Externe Publikationen (2023)

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

Volltext/Full text

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).