This paper investigates the effects of ethnic violence on export-oriented firms and their workers. Following the disputed 2007 Kenyan presidential election, export volumes of flower firms affected by the ensuing violence dropped by 38 percent and worker absence exceeded 50 percent. Large firms and firms with stable contractual relationships in export markets registered smaller proportional losses and had fewer workers absent. Model calibrations indicate that, to induce workers to come and work overtime, operating costs, on average, increased by 16 percent. For the marginal worker, the cost of going to work exceeded the average weekly income by 320 percent.
Bureau for Research and Economic Analysis of Development. BREAD Working Paper No. 287, November 2010. 47 pp.