Economic Strain, the Recent Recession, and Sources of Financial Support Among Lower Income Families in Kenya and the U.S

Background: The 2008 economic recession has been the most pervasive economic downturn since the Great Depression. The effects of the recession were not only felt in the U.S., but also across the world, including developing countries in sub-Saharan Africa. This study aims at comparing how poorer families living in Athens, GA, U.S. and Nairobi, Kenya were affected and coped with recession. Among the important questions was how the recession affected the economic strain of these families and how formal and informal sources of financial support mitigated theses effect. It was hypothesized that for families living in the U.S., formal sources of support, including welfare programs, would mitigate the effects of the recession on economic strain. For families living in Kenya, we hypothesized that informal sources, including friends and family, would assist reducing economic strain. Finally, we expected income from assets, to moderate economic strain in both groups.

Methods: Cross-sectional data was collected between summer 2009 and spring 2010 from households living in public housing in the two sites. The total sample was n=383, (n=194 from Athens and n=189 from Nairobi). For this paper, the dependent variable is the economic strain construct as developed by Conger and colleagues (1994, 2002). Economic strain refers to subjective feelings of distress or strain associated with a perception of inadequate financial resources to provide for the needs of family and an inability to cover expenses each month. Structural equation modeling was used to test for measurement and mean invariance as well as the regression paths.

Results: Measurement invariance of the economic strain construct was established. Second, the variance of economic strain was shown to be equal between groups [1.00 vs. 1.02; Δχ² (1, n = 383) = 0.51, p > .05]. Third, the economic strain for Nairobi residents was 0.505 standard deviations above the mean of economic strain for residents of Athens (whose mean is set to zero for scale setting). Finally, only income from employment moderated the effects of the recession on the economic strain among Athens residents.

Conclusions and implications: While the study is limited by its cross-sectional design, the snapshot findings are important for policy and practice. The cross-national validation of the economic strain scale was an important finding while the mean invariance finding is also interesting. Clearly, poorer families in richer countries are still more likely to find financial supports through employment than their counterparts in developing countries. Efforts at global and macro levels are needed to help poorer families in developing countries to have buffers during economic downturns.