Around the world, the state of refugee integration policy is dire. Fifty-five percent of all refugees live in countries that restrict their rights to work. They lack rights to be formally employed, to start businesses, to move around freely, to receive equal protection in the workplace. Eighty-nine percent of refugees live in countries that do not generally recognize their professional or academic qualifications.
The same refugees often judged by their economic contribution face policies designed to reduce their economic contribution.
Fortunately, this is changing. Refugee integration policy around the world is evolving. It is being rebuilt to unlock refugees’ economic potential for mutual benefit. Integration policy is increasingly designed around rigorous evidence for what really works.
I just spoke at a gathering of some of the world’s leading social scientists studying refugee integration, at the University of California Davis Global Migration Center. I was invited to draw lessons from the stack of cutting-edge research presented there.
Here are three broad lessons I personally take from the new, rigorous evidence I saw there. I’ll follow that with some of the many research questions where we have much less evidence.
1. Traditional refugee settlement policy has randomly scattered refugees around their host countries. This has been hobbling their economic integration. Stop doing this.
Like many countries, Denmark has randomly assigned an initial place of residence across the country, in order to spread them thinly. In new research, Mette Foged, Linea Hasager, and Giovanni Peri find that refugees who happened to be initially settled in particular localities—places where people like them had succeeded economically in the past—had 2 percentage-points higher employment and US$900 higher annual earnings 15 years later.
The United States likewise randomly assigns place of settlement for refugees who arrive without family ties. Jens Hainmueller and colleagues have shown that if refugees were instead settled in places where people like them had succeeded economically in the past, their median employment rate several years later would double.
Put differently, these frontier studies suggest that if a refugee is not employed, one of the key reasons they are not employed is not any lack of desire or ability within the refugee. It is the policy decision to scatter them at random. That policy should end worldwide. It should be replaced by settlement policy based on data and evidence.
2. To build work incentives for refugees, think carrots—not sticks. And not bans. And not limbo.
Refugees respond robustly to positive incentives to work. Bernt Bratsberg presented ongoing research on a policy change in Norway that suddenly required refugees to earn a reasonable, flexible minimum income before they could sponsor their spouses to follow them. This created to a clear, tangible reward for refugees’ effort to seek out better opportunities in the labor market, causing their employment to rise 15 percentage points. Ana María Ibáñez, Dany Bahar, and Sandra Rozo have shown that simply giving Venezuelan forced migrants a basic, temporary legal status—and thus rewarding them for their efforts to secure formal employment and start businesses—sped up their economic integration. This mass regularization increased the consumption of displaced Venezuelans by 31 percent and their rate of entrepreneurship by a factor of ten.
So carrots can work. But there is much less evidence in favor of sticks—negative incentives to work. Foged and others study a policy reform in Denmark that sharply reduced refugees’ welfare payments, in an attempt to force them into the labor market. The reform had no detectable effect on refugees’ employment or earnings in the medium and long term. In the very short term it pushed a small number of male refugees into precarious jobs with low earnings—with the side effect of reducing the amount of time they invested in learning the Danish language, a key to long-term integration. This ‘stick’ policy failed. Denmark rightly reversed it a decade later.
Many countries actively ban refugees from working for a limited period after arrival. This is intended to deter economic migrants from using humanitarian pathways, not to prevent the economic integration of humanitarian migrants. But it does just that. Jens Hainmueller and colleagues have shown that a policy change in Germany, which allowed refugees to work just seven months closer to their arrival date, caused a jump in their long-term economic integration. Refugees allowed to start work just a few months earlier were twenty percentage points (!) more likely to be employed five years later, long after they received asylum and full work permission. Their economic and fiscal contribution to Germany had been crippled by policy.
Another way that policy prevents integration is by placing asylum seekers in limbo. Hainmueller and his team have studied how the medium-term economic integration of refugees in Switzerland is shaped by how long they wait for their refugee status to be adjudicated. Refugees who half to wait half as long are 4 to 5 percentage points more likely to be employed several years later—long after they receive asylum and full work permission. Again, what is holding back the full economic contribution of many refugees is the policy decision to keep them in limbo for years, rather than rewarding their efforts to enter workplaces during a pivotal early period.
3. Investments in refugees’ human capital, even costly ones, pay off.
The single most effective policy that Foged and colleagues evaluate is a large expansion in the quantity and quality of Danish language training publicly provided for newly arrived refugees.
They study refugees exposed to language training suddenly expanded by hundreds of hours, comparing them to otherwise very similar refugees who arrived just before the reform. Fifteen years later, this large investment in refugees’ human capital had caused them to be 5–6 percentage points more likely to be employed, and to earn US$3,000 more per year.
But the quality and certification of language training are central. Hainmueller and colleagues study two different German language programs for refugees arriving around 2015. One was 320 hours of instruction with no standardized curriculum, and had no detectable effect on recipients’ subsequent employment or earnings. The other was 600 hours, with a rigorous standardized curriculum, and crucially, it offered graduates a certificate that made their skills visible and tangible to employers. This second program caused its graduates to be 13 percentage points more likely to be employed just one year later.
The resources devoted to refugees’ initial human capital investment must be serious in order to really work. But when they are serious, they can pay off. For decades.
The biggest takeaway
All of these lessons point to one meta-lesson. More fundamental than any specific policy, barriers to refugee integration are driven by how many people conceive of refugee’s economic lives. They often view refugees as recipients of charity, a burden that others are morally pressured to bear.
Why, after all, do so many countries randomly scatter refugees? To spread a perceived burden as thinly as possible. Why did Denmark slash welfare benefits for refugees? To reduce a perceived fiscal burden. Why not massively scale up public investment in proper language training in Germany in 2015? To avoid the burden of initial costs, regardless of later benefit.
Hold on, it gets worse. This evidence implies that conceiving of refugees as a burden can be self-fulfilling—can needlessly turn them into a burden.
Think of a dog chasing its tail as you follow this common, circular line of reasoning: ‘We need barriers to integration, otherwise more refugees will come.’ Why shouldn’t more refugees come? ' Because the ones already here are not integrating.’ Why aren’t they integrating? In large measure, because of barriers to integration.
A coherent justification for barriers cannot rest on effects produced by barriers. The evidence reviewed here implies that if one wants to know why a refugee is not employed, one could start not by questioning the number of arrivals but by asking: Why were they not settled in an area with proven economic opportunity for people like them? Why were they not given the startup capital, including human capital, they needed in order to get established? Why were their long-term employment prospects hobbled by lengthy uncertainty and even employment bans when they arrived?
Better, evidence-based policy can break this cycle, so the dog can stop chasing its tail and rest. A new generation of research is showing how.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.