Labor market integration of refugees and internally displaced persons: The behavioral and socio-emotional side

Refugees and internally displaced persons (IDPs) often struggle to integrate into the labor market. Their employment rates, wages, and working conditions lag behind locals and other migrants.

I discussed one of the reasons, the legal restrictions they face, in a previous blog: In many countries the displaced do not have the unrestricted right to work, move freely, own property, or access financial services. Other important reasons often cited are that they do not choose their destination primarily based on existing demand for their skills and labor. Due to their displacement, they also often lose their assets.

But there is also a behavioral, social and emotional side that is often forgotten. Economists have only recently started to explore how the experience of forced displacement might impact the socio-emotional wellbeing and change the economic behavior of refugees and IDPs, which in turn may play an important role in shaping their labor market outcomes. Before policymakers design jobs interventions for this target group, they may need to inform themselves of these changes and adapt the designs accordingly.

Let’s have a look at three key aspects that I explored in our recent Jobs Solutions Note, “Jobs Interventions for Refugees and IDPs.”

The time horizon of those forcibly displaced influences if they are willing to make host country-specific investments

Refugees and IDPs are often unsure if and when they might need to move again. How permanent their legal status is plays an important role for refugees in this regard. Depending on the situation and their time horizon, they might be less willing or more willing to make language, skills, or hard asset investments in their new location. Refugees planning to stay in Uganda, for example, are more interested in looking for local jobs than those who plan to return to their country of origin. Since resettled refugees are more likely to stay in the US than economic migrants, they make more country specific human capital investments.

The pay-off period for investments plays a role: Granting certainty about longer-term legal status, secure living conditions and access to economic opportunities as quickly as possible offers incentives for the forcibly displaced to make these investments. Otherwise, those forcibly displaced might end up making decisions which are ex-post inefficient. After a long period of uncertainty, specific investments may no longer be optimal. Refugees and IDPs might also take asset portability into consideration. They might, for example, prefer investments in human capital to investments in physical capital, and make sure that their human capital is transferrable.  

Psycho-social interventions can have important positive effects

Refugees and IDPs might suffer from traumatic experiences before or during their displacement, such as becoming victims of violence or losing friends and relatives. Factors at destination like encampment, forced idleness, social isolation, and insecurity about legal status and income increase the likelihood of psychological effects like depression, anxiety, and post-traumatic stress disorder (PTSD). Studies vary greatly in the levels of incidence and prevalence of symptoms they report, due likely to context as well as different measures and methods used.

The experience of violence, which is a common trigger of the decision to flee, can also impact general outlook on life and risk aversion. The impacts seem to be different if someone was directly exposed to violence or not, the type of violence and intensity of exposure, and if they were directly forced to leave or not, and might change over time. A study on internally displaced households in Colombia, for example, finds that those who had been exposed to more severe violence have lower perceived prospects of upward mobility relative to the mean of sampled IDPs. In addition, discrimination and stereotypes in the host country can lower aspirations and lead to self-fulfilling prophecies. Qualitative work with young refugees in Kampala, Uganda, for example, suggested linkages between discrimination, low self-worth, and low educational attainment and labor market participation.

Depending on their individual experiences prior, during and after displacement and available resilience factors, some refugees and IDPs may benefit from psychosocial interventions to overcome internal barriers and become successful employees or entrepreneurs. Existing evidence shows significant positive effects, even of short interventions in low resource environments. Furthermore, being economically active can serve as a significant source of resilience, as it provides a sense of self-worth, belonging and stability.

Refugees and IDPs need social networks in host countries to help them overcome social isolation and information asymmetries on the labor market

While economic migrants tend to go to where they have social networks, the decision  forcibly displaced people make on where to go is determined largely by violence, with less forethought. Lack of language skills not only hinders them from finding higher paid employment but also from building up social networks. In addition to language barriers, having to live in remote areas in camps or in group accommodations, combined with restrictions on freedom of movement, increases social isolation and makes it difficult for those forcibly displaced to build networks with hosts. Fostering contacts with certain groups of co-nationals or other refugees and IDPs can be helpful. Also facilitating interactions with locals  may improve long-term integration.

This blog is based on the Jobs Interventions for Refugees and Internally Displaced Persons Solutions Note, published in October 2020. This is the seventh post in a blog series based on research and evidence from the World Bank Jobs Group’s Solutions Notes. The Solutions Notes synthesize findings from the Jobs Umbrella Multidonor Trust Fund (MDTF)-funded activities and other sources based on research, evaluations, pilots, and operations. Each Note succinctly analyzes efforts and challenges, and provides an evaluation of what has worked, and what does not.
The first six posts in the series include:

• Promoting a Gender-Inclusive Labor Force Blog 1: Five ways to make skills training work for women
• Promoting a Gender-Inclusive Labor Force Blog 2: Five strategies to address employment hurdles faced by young Syrian women refugees
• Promoting a Gender-Inclusive Labor Force Blog 3:  Six strategies to increase young women’s access to digital jobs
• Jobs Solutions Note Blog 4: Adapting jobs policies to technological change
• Jobs Solutions Note Blog 5: Africa imports billions in food a year. It could be creating local jobs instead
• Jobs Solutions Note Blog 6: What we’ve learned about supporting jobs in fragile and conflict-affected environments