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).
STEG Working Paper Series
• Research Theme 0: Data, Measurement, and Conceptual Framing,
Research Theme 2: Labour, Home Production, and Structural Transformation at the Level of the Household,
Research Theme 4: Trade and Spatial Frictions,
Cross-Cutting Issue 1: Gender,
Cross-Cutting Issue 3: Inequality and Inclusion
Trade Exposure and Social Cohesion: Evidence from Uganda
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