# **1. Introduction**

Fragile and conflict settings are becoming increasingly important to poverty reduction, where the share of the world’s poor living in fragile settings is expected to increase from 17 percent in 2017 to approximately 60 percent by 2030.<sup>1</sup> Although there are numerous articles investigating the consequences of violent conflict on economic outcomes, there is less evidence regarding the non-violent capture of territory.<sup>2</sup> Furthermore, there is less evidence regarding how household behavior changes as these tumultuous events unfold- both the types of coping strategies used and their timing. A better understanding of both the degree to which standards of living might be affected by such uncertainty, and the manners in which households might cope with these events, can help identify interventions that might support households in these increasingly important settings.

This article addresses these issues by investigating the consequences of the unexpected and mostly non-violent capture of Yemen‘s capital, Sana‘a, by Houthi rebels in September of 2014. This setting is unique, where the capture was very quick and accomplished with little violence.<sup>3</sup> The rebels placed the president under house arrest and immediately took control of key government agencies- including those responsible for defense and finance. However, because there was little violence, and because the rebels were not initially concerned with many of the less prominent government agencies, the Central Statistical Organization was able to complete an ongoing multi-themed household survey as planned for the remaining three months of the year. This setting allows one to analyze the degree to which households were affected by the capture, the ways in which households coped with the shock, and the different impacts the capture might have had on different household members.

The capture of the city potentially affected households in a number of ways. First, the capture and resulting uncertainty potentially had an adverse impact on the economic climate and peoples’ ability to earn a living. Second, although there was not widespread violence, the change in the rule of law did result in a perceived decline in safety that might have made it more difficult for individuals to leave their households. For example, there were reports of targeted violence by Houthi forces<sup>4</sup> , and there was an increase in terrorist events.<sup>5</sup> And third, the capture of the city could have led to a disruption of supply chains and increases in the prices of goods and services.

Although the household survey continued following the capture of the capital, the identification strategy requires the sampling of households to not significantly change following the capture. The sampling design was such that respondents were randomized over space and time,

> 1See (accessed March 2018): http://www.worldbank.org/en/topic/fragilityconflictviolence/overview.

> 2For a survey of the economic effects of conflict, see Blattman and Miguel (2010). Alternativley, a separate literature has investigated the effects of political instability, where the instability could be caused by reasons aside from conflict (e.g., Alesina et al. 1996; etc.).

> 3The city was captured after a 4-day siege that was mostly centered around a military base in the northern part of the city, and abruptly ended when the internationally-recognized government ceded control of the city. See (accessed July 2017): http://www.bbc.com/news/world-29380668.

> 4See (accessed July 2017): https://www.hrw.org/news/2017/01/12/yemen-no-accountability-war-crimes.

> 5See (accessed July 2017): https://www.theguardian.com/world/2014/oct/09/yemen-suicide-attack-kills-

> 20.

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