negative effect on most livelihood diversification and commercialization outcomes tends to occur in Gambella region while the more positive effects tend to occur in Tigray (except sale of crop products), Afar (except diversification of activities as a secondary occupation), and Somali (except diversification of activities as a secondary occupation). These differential impacts across regions could be attributed to the large number of refugees that Gambella hosts: The region hosts about half of the refugee population in Ethiopia which is almost as large as the population of the region.

Table 2: 2SLS estimation of the impact of refugee inflow on livelihood diversification and agricultural commercialization by region.

||(1)<br>Tigray|(2)<br>Afar|(3)<br>Somali|(4)<br>Benishangul-|(5)<br>Gambella|
|---|---|---|---|---|---|
||**_Panel A: IH_**<br>|**_S(Primary a_**|**_ctivity diversificat_**<br>|Gumuz<br>**_ion)_**<br>||
|IHS (refugee presence)|0.220***|-|-0.283**|0.516*|-0.058|
|||0.104***||||
||(0.016)|(0.027)|(0.112)|(0.275)|(0.114)|
||**_Panel B: IHS_**<br>|**_(Secondary_**<br>|**_activity diversifica_**<br>|**_tion)_**<br>||
|IHS (refugee presence)|0.333***|0.439***|2.456***|1.584|-|
||||||0.807***|
||(0.035)|(0.045)|(0.618)|(1.071)|(0.278)|
||**_Panel_**<br>|**_C: IHS(Cro_**|**_p product sale)_**|||
|IHS (refugee presence)|-0.774***|-0.156|0.045|9.537*|-|
||||||0.430***|
||(0.127)|(0.138)|(0.922)|(4.986)|(0.139)|
||<br>**_Panel D_**|<br>**_: IHS(Livest_**|<br>**_ock product sell)_**|||
|IHS (refugee presence)|0.537***|-0.091|14.533**<br>*|4.610**|-0.812|
||(0.098)|(0.096)|(3.774)|(2.080)|(1.423)|
|N|833|390|990|536|626|
|Kebele fixed effects|Yes|Yes|Yes|Yes|Yes|
|Nearest region fixed<br>effects|Yes|Yes|Yes|Yes|Yes|
|Controls|Yes|Yes|Yes|Yes|Yes|

***significant at 1%, **significant at 5%. *significant at 10%, village level clustered standard errors in parenthesis; IHS stands for inverse hyperbolic sine transformation; the summary statistics of first-stage regressions for each region are presented in Appendix E. The first-stage regressions have a significant F statistic greater than 10 for all regions subsample regressions, except Benishangul-Gumuz and Gambella regions. Hence, we use limited information maximum likelihood (LIML) estimator, instead of 2SLS estimator, for Benishangul-Gumuz and Gambella regions sample, which minimizes the bias in 2SLS due to the weak instrument by weighted linear combination of OLS and 2SLS estimates.

The results in Table 3 present a gender-differentiated impact of the refugee presence on livelihood diversification and agricultural commercialization. The refugee presence had a positive effect on the diversification of activities as a secondary occupation for male-headed households and sale of livestock product: a 1% increase in refugee inflow led to a 2.7% and 15.9% increase in the diversification of activities as a secondary occupation and sale of livestock products, respectively. We further find the refugee presence had no effect in any of the diversification and commercialization measures for female-headed households, suggesting that male-headed households are more likely to take livelihood opportunities created by refugee inflow than female-headed households. This could be partly attributed to the Ethiopian culture that encourages men to seek employment outside the home compared to women. In other 17