DP8074 The Effect of Ethnic Violence on an Export-Oriented Industry

Author(s): Christopher Ksoll, Rocco Macchiavello, Ameet Morjaria
Publication Date: October 2010
Keyword(s): ethnic Violence, exports, firm heterogeneity, non-traditional agriculture
JEL(s): D74, F14, O13, Q13
Programme Areas: Industrial Organization, International Trade and Regional Economics, Development Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=8074

This paper investigates the effects of ethnic violence on export-oriented firms and their workers. Following the disputed 2007 Kenyan presidential election, export volumes of flower firms affected by the ensuing violence dropped by 38 percent and worker absence exceeded 50 percent. Large firms and firms with stable contractual relationships in export markets registered smaller proportional losses and had fewer workers absent. Model calibrations indicate that, to induce workers to come and work over-time, operating costs, on average, increased by 16 percent. For the marginal worker, the cost of going to work exceeded the average weekly income by 320 percent.