DP5999 Insecurity and Welfare

Author(s): Marcel Fafchamps , Bart Minten

Publication Date: December 2006

Keyword(s): crime , school enrolment , health , project placement

JEL(s): I38 , K42 , O15

Programme Areas: Development Economics

Link to this Page: www.cepr.org/pubs/dps/DP5999.asp.asp

Using original survey data, we examine how insecurity affects welfare. Correcting for unobserved heterogeneity and possible endogeneity, we find an effect of insecurity on incomes, school enrolment, health status, and infant mortality. Results are robust to the inclusion of various shocks potentially affecting both welfare and insecurity. But the significance of the insecurity effect varies somewhat with the method used. We further find a significant effect of insecurity on the provision of certain public services, notably schooling and health care, and in the placement of development projects. Taken together, the evidence suggests that insecurity is an important determinant of welfare in the country studied.