Gains from Variety : Refugee-Host Interactions in Uganda

Refugees are mainly hosted in low-income countries, where they often remain for a long time. Therefore, it is important to assess how they integrate with the local economy. Proximity between households might be welfare-improving as it favours mutual beneficial exchanges. In particular, welfare gains might be generated through a greater variety of commodities.We propose a theoretical model that uses the love for variety to frame the possible benefits arising from refugee-host interactions facilitated by geographical proximity. We complement the conceptual framework with an empirical analysis that makes use of a unique dataset covering around 80% of the refugee population living in Ugandan settlements.The empirical results show that proximity increases the food expenditure and the variety of food consumption of refugees and hosts. We also found that exposition to inter-group interactions rises the probability to run enterprises by refugee households, while hosts are not crowding out from production