Financial Security, Climate Shocks, Social Cohesion

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This paper investigates the link between financial security and social cohesion in a setting in which cohesion is key: the integration of refugees into ultra-poor host communities in the developing world. We exogenously vary the financial security of hosts and refugees by implementing a field experiment of a large cash transfer and employment support program. Increased financial security of both refugees and hosts led to higher levels of trust, new friendships with out-groups, a greater willingness to share resources with out-groups and a stronger sense of belonging for refugees (our overall social integration measure increased by 0.37 standard deviations relative to the control group). Two years later, the study area was affected by a category three tropical cyclone that caused damage to some houses and crops. Consistent with a causal interpretation of the relationship between financial security and social cohesion, participants who experienced even a moderate reduction in their financial security reported a disproportionately large weakening of social cohesion (by 0.25 standard deviations). Taken together, these findings suggest that expanding the scope of social protection to include both refugees and low-income host community members can promote socioeconomic integration. However, these gains are fragile and easily undone when individuals are affected by unexpected negative climate shocks.