Essays on the Microeconomic Impact of Armed Conflict: Evidence from Ukraine

Chapter 2: Armed conflict and household consumption behaviour Focusing on the ongoing conflict in Eastern Ukraine, this chapter investigates the effects of economic shocks caused by the outbreak of an armed conflict on household consumption behaviour. Using the Ukrainian Household Budget Survey data, this paper adopts household’s consumption expenditure for eleven categories of goods and services as a proxy to measure household consumption in times of conflict. The empirical analysis applied a modified differencein-difference (DiD) empirical strategy which uses household distance from the conflict regions as a measure of conflict intensity and level of household exposure to economic shocks to assess the average impact of armed conflict on several household consumption goods and budget shares. Estimation results revealed that households closer to militarized conflict have lower chance of spending on most commodities from 2014 to 2016 compare to households that are further away. Specifically, household budget share allocated to food, clothing and footwear, and healthcare services decrease with proximity to armed conflict. On the other hand, each kilometer closeness to conflict zone increases household budget share for alcohol, education, transport and housing. This study find no effect of household proximity to conflict zone on budget share devoted to utility, leisure, durable and other goods. Most of the household’s annual expenditure is allocated to food and housing. Estimations of elasticity of demand confirm that in a war situation, households perceive only food and housing to be necessities, and thus allocate most of their expenditure to those goods whereas spending on other goods is regarded as a luxury.

Chapter 3: Analysis of household resilience in armed conflict situation This chapter investigates how responses to shocks affect people’s livelihood and provides evidence of how household resilience is affected by armed conflict. Employing a modified difference-indifference estimation technique, the research finds evidence of a link between armed conflict and resilience, and it sufficiently explains how proximity to conflict zone affects a household's ability to mitigate economic shocks. Specifically, the indicators of household resilience: access to basic services, adaptive capacity, assets, social safety network and access to food decline due to the conflict in Donbas. This study provides more evidence that the closeness of a household to armed conflict has a substantial impact on the components of resilience indicators.

Chapter 4: The health impact of armed conflict This chapter explores the channels through which individual’s physical health is affected the armed conflict in Eastern Ukraine. Using a modified difference-in-difference estimation technique, the study argues that armed conflict has a negative impact on physical health. In particular, the selfreported health status for individuals shows significant deterioration due to violent conflict. The effect is stronger for the population closer to the conflict location. Second, results show that access to healthcare service improves during the period of conflict. The study did not find an effect of the conflict on chronic disease.