Essays on the Welfare Impact of Economic Shocks in Low-Income Countries

This thesis consists of three essays on the impact of unanticipated shocks on household welfare outcomes in sub-Saharan African countries. Paying particular attention to disaggregated shock pattern for seasonal rainfall measures, the first essay studies the effects of household shocks on the incidence of domestic violence using a unique set of micro data from the World Bank’s Living Standard Measurement Survey for Tanzania. Coefficient estimates show that negative rainfall shocks increase the likelihood and severity of intimate partner violence in the household. More importantly, estimates from the disaggregated specification reveal that the overall effects are driven by droughts rather than floods. The second essay examines the effect of mobile money adoption by households in Tanzania on welfare outcomes. Using an instrumented difference-in-difference methodology in addition to household and individual fixed effects for a panel of households and individuals, our results show that per-capita expenditure pattern for the extremely poor households is significantly smoothed in periods of negative idiosyncratic shock for mobile money adopter households. At the individual level, estimates reveal consistent welfare boost stories during negative shocks for human capital accumulation among children and; preventive health expenditure and financial subjective well-being in general. The third essay investigates the impact of exogenous variation in early life rainfall patterns across localities on short-term nutritional health status and long-term welfare outcomes respectively. While our baseline results for children anthropometric measures reveal that negative rainfall deviation – at in-utero, in first and second years of birth respectively – leads to a resultant adverse effect on weight and height -for-age z scores for children, drought related shocks are estimated to be more persistent for disaggregated shock specifications. Regarding the long term outcomes, we find that female adults exposed to in-utero drought shock are more likely to be hospitalised and less productive relative to non-exposed group.