Policy Research Working Paper 11123 Refugees and Other Forcibly Displaced Populations Sandra V. Rozo Guy Grossman Development Economics Development Research Group May 2025 Policy Research Working Paper 11123 Abstract Forced displacement has reached unprecedented levels, with Investments in inclusive social protection services that ben- more than 120 million individuals displaced globally as of efit both displaced populations and host communities can 2024 due to conflict, violence, climate change, and human alleviate pressures and foster social cohesion. Additionally, rights violations. These crises are increasingly protracted, cash transfers enhance immediate well-being and are most characterized by low return rates, and demand a shift from effective in the medium run when paired with initiatives hosting models solely funded through humanitarian aid that promote the economic self-reliance of forcibly dis- to financially sustainable, medium- to long-term strategies. placed populations. Granting refugees the right to work This VoxDevLit synthesizes quantitative research conducted has demonstrated transformative impacts on economic between 2010 and 2024, focusing on studies that use exper- and well-being outcomes, while also providing a financially imental or quasi-experimental methods to examine (1) the sustainable solution for hosting refugees over the medium impacts of forced displacement on host communities and (2) to long term. Finally, addressing the mental health chal- the effectiveness of policies designed to support both forci- lenges faced by forcibly displaced populations is critical to bly displaced populations and their hosts. Key insights from enable them to recover their lives. This review underscores this body of work indicate that forced displacement inflows the importance of transitioning from humanitarian aid to generally exert neutral effects on native employment and self-reliance models, closing policy implementation gaps, wages, although vulnerable native workers—particularly and tailoring interventions to local contexts. those in the informal sector—may initially face challenges. This paper is a product of the Development Research Group, Development Economics. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The authors may be contacted at sandrarozo@worldbank.org. The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Produced by the Research Support Team Refugees and Other Forcibly Displaced Populations Senior Editor: Sandra V. Rozo1 Co-Editors: Guy Grossman2 1 Development Research Group, World Bank. Email: sandrarozo@worldbank.org. We are extremely grateful to María José Urbina for her outstanding support as research assistants of this project. 2 University of Pennsylvania, Political Science Department. INDEX CONTENT I. SUMMARY II. INTRODUCTION A. Defining Forced Displacement B. Global Trends: The Exponential Growth of Forced Displacement C. Policy Relevance: Transitioning from a Humanitarian to a Self-Sufficiency Approach D. Objective of This Review III. CHARACTERISING RECENT RESEARCH ON FORCED DISPLACEMENT IV. FIRST GENERATION EVIDENCE: HOW FORCED MIGRATION AFFECTS HOST COMMUNITIES A. Labor Markets and Economic Growth: Short-Term Challenges, Long-Term Opportunities B. Public Services: Education and Health C. Political Effects D. Attitudes, Perceptions, and Social Cohesion E. Key Takeaways for Policy Makers: Lessons from First-Generation Evidence V. SECOND GENERATION EVIDENCE: SUPPORTING FORCED MIGRANTS AND HOST COMMUNITIES A. Humanitarian Support: Cash Transfers B. The Right to Work and Labor Market Integration for Refugees C. Addressing Trauma: The Critical Role of Mental Health in Refugee Integration D. Bridging Divides: Strategies to Strengthen Social Cohesion in Refugee-Host Dynamics E. Key Takeaways for Policy Makers: Lessons from Second-Generation Evidence VI. CONCLUSIONS AND POTENTIAL DIRECTIONS FOR FUTURE RESEARCH REFERENCES Appendix A – Scope of the Literature Review Appendix B – World Refugee and Asylum Policies Data 2 I SUMMARY Forced displacement has reached unprecedented levels, with more than 120 million individuals displaced globally as of mid-2024. These crises, driven by conflict, violence, climate change, and human rights violations, have become increasingly protracted, with low rates of return for displaced populations. This reality underscores the need to transition from short-term humanitarian responses to long-term strategies that promote self-reliance of forcibly displaced populations. Key findings from research on forced displacement 1. Impacts on host communities: • Forcibly displaced population inflows generally have neutral or positive effects on native employment and wages, although informal workers and other vulnerable groups may face short-term challenges. • The arrival of refugees increases economic activity of the local communities near these populations, but households are affected differently depending on their initial occupation. • Public services, such as education and healthcare, initially experience strain but benefit from inclusive investments that support both displaced and host populations. • Political responses to forced migration vary widely, from heightened anti-immigration sentiments in some developed countries to less backlash or even positive attitudes toward forced migrants tied to improved services and shared benefits in developing countries. 2. Supporting forced migrants: • Cash transfers provide immediate benefits for displaced populations, including increased consumption, improved well-being, and reduced child labor, but they are more effective when paired with initiatives that force migrants’ self-reliance. • The right to work significantly improves refugees’ economic and mental health outcomes, as demonstrated in Colombia’s regularization program, which also showed minimal adverse effects on host communities. • Addressing mental health challenges is essential for fostering individual resilience and enabling successful integration into labor markets and communities. 3. Social cohesion: • Inclusive aid programs that benefit both host and refugee populations are critical for reducing tensions and fostering trust. For instance, programs in Uganda and Lebanon that integrate support for both groups have successfully improved social cohesion and reduced hostility. • Exclusionary models, which benefit only refugees, on the other hand, risk amplifying resentment and undermining long-term stability. Policy recommendations 3 1. Pair humanitarian aid with long-term solutions. Combine immediate relief efforts with pathways to self-reliance, such as language, vocational training, and labor market access. 2. Bridge gaps between policy and practice. Ensure that inclusive refugee policies are implemented effectively by addressing bureaucratic barriers, strengthening local capacity, and engaging host communities. 3. Invest in mental health and social cohesion. Develop integrated programs that (a) tackle trauma and mental health and (b) foster trust and collaboration between host and refugee populations. 4. Adapt to local contexts. Design policies tailored to the cultural, economic, and institutional realities of each host country to maximize effectiveness and inclusivity. 4 II INTRODUCTION A. Defining Forced Displacement This review explores recent research on forced displacement, which refers to the involuntary or coerced movement of individuals driven by circumstances such as generalized violence, persecution, conflict, natural disasters, or human rights violations. While the definition of forced displacement may be clear on paper, distinguishing between voluntary and involuntary migration is often challenging in practice, as often the line between the two can be blurred. Forced migrants are classified into: 1. Refugees: who have crossed an international border and have been recognized as such by their country of asylum. 2. Internally Displaced Populations (IDPs): who remain within their country's borders. 3. Asylum Seekers: who are seeking international protection but whose claims for refugee status are yet to be determined. 4. Other People in Need: which typically represent other forcibly displaced populations which are not yet recognized as refugees under international frameworks, often due to ongoing political negotiations. B. Global Trends: The Exponential Growth of Forced Displacement Since the United Nations High Commissioner for Refugees (UNHCR) began systematically recording data in 1951, the number of forcibly displaced individuals has grown exponentially, surpassing 120 million by mid-2024 (Figure 1, Panel A). Unfortunately, with the persistent emergence of new conflicts and the escalating risks posed by climate change, this upward trend is likely to continue. Today, nearly every continent faces a forced migration crisis, encompassing both origin and destination countries (Figure 1, Panel B). Figure 1. Global Trends in Forced Displacement, 1951–2024 Panel A: Overall Time Trend Panel B: Top Origin and Destination Countries Notes: Panel A illustrates the overall time trend of forcibly displaced populations registered by UNHCR from 1951 to 2024. Since 1993, UNHCR has categorized forcibly displaced individuals into four groups: refugees, asylum-seekers, others in need of protection, and internally displaced persons (IDPs). Panel B shows migration flows between origin and host countries for the top 5 30 countries with registered refugees, asylum-seekers, and others of concern during the same period. The width of each line represents the number of refugees migrating, with thicker lines indicating larger migration flows. C. Policy Relevance: Transitioning from a Humanitarian Approach to a Self-Sufficiency Approach Forced displacement crises are often protracted, with forcibly displaced individuals rarely returning to their places of origin (Figure 2). Given the exponential increase in the number of forcibly displaced individuals, the enduring nature of these crises, and the low return rates and low rates of resettlements in high-income countries, it is essential to transition from a basic humanitarian response to approaches that enable forced migrants to achieve economic self-sufficiency in the medium to long term (Moya and Rozo 2024). This need is particularly urgent when considering that international humanitarian aid is both finite and insufficient, currently covering only 45% of the required funding to address these emergencies (Figure 3). The immense scale of the problem underscores the critical importance of generating evidence on the most effective ways to improve the well-being of forced migrants and their host communities. Figure 2. Protracted Crises: Trends in Refugee Returns, 1951–2024 Notes: The figure shows the share of refugee returns from 1964 to 2024. A returnee refers to a refugee or internally displaced person who has returned to their country or area of origin with the intention of remaining permanently but has not yet fully reintegrated into their community. Data source: UNHCR (2024). Figure 3: Humanitarian Funding and the Gap in Coverage for Forced Displacement Crises 6 Notes: The percentage labels in each bar represent the global appeal coverage tracked for each year. Data source: Financial Tracking Service, OCHA Services. Encouragingly, trends in policy support for forcibly displaced populations indicate gradual progress. The Dataset of World Refugee and Asylum Policies (DWRAP) 3 highlights a steady global shift toward more inclusive policies, measured across five dimensions: (1) access, which reflects the ease of entry and security of legal status; (2) services, covering public welfare provisions; (3) livelihoods, representing the right to work and own property; (4) movement, addressing encampment and mobility restrictions; and (5) participation, which includes pathways to citizenship and political rights. While challenges persist, Europe and Latin America have emerged as notably supportive environments, demonstrating that meaningful policy advancements are possible (Figure 4). Figure 4. Aggregate Asylum Policy Index Notes: Data are sourced from the Dataset of World Refugee and Asylum Policies (DWRAP). The figure displays the evolution of the Aggregate Asylum Index from 1951 to 2021, disaggregated by continent. The Aggregate Asylum Index is a principal component index comprising five dimensions: (1) access, reflecting the ease of entry and security of legal status; (2) services, covering the provision of public services and welfare; (3) livelihoods, representing the ability to work and own property; (4) movement, addressing encampment policies; and (5) participation, including citizenship and political rights. The index ranges from 0 to 1, with higher values indicating more inclusive policies. D. Objective of This Review This review synthesizes findings from studies published or released as working papers since 2010, focusing on the effects of forced displacement in host communities and the evaluation of policies designed to support forced migrants and their host communities. The scope is limited to quantitative studies employing quasi-experimental or experimental methods. While this approach excludes much valuable qualitative and descriptive work, these boundaries are necessary for space and analytical focus. A summary of all papers included in the review is provided in the Online Table Appendix accompanying this document. Further details on the scope of the review are described in Appendix A. 3 Appendix B describes all the details related to this data source and how the indexes were computed. 7 The review is organized into four additional sections. Section III characterizes the body of research included within the review’s scope. Section IV examines the evidence on the impacts of forced displacement on host communities. Section V explores research evaluating the effects of policies aimed at supporting forced migrants and their host communities. Finally, Section VI concludes by presenting key policy lessons and identifying potential directions for future research. III. CHARACTERIZING RECENT RESEARCH ON FORCED DISPLACEMENT Our review identified approximately 250 papers employing quasi-experimental or experimental methods that examine the effects of forced displacement and the policies addressing this issue. The publication of these papers grew exponentially between 2010 and 2024 (Figure 4). 4 This surge in research aligns with several key developments: the increasing scale of forced migration flows, the availability of new cross- sectional surveys and longitudinal datasets that provide detailed insights into forcibly displaced populations, 5 the establishment of institutional collaborations such as the Joint Data Center between the World Bank and UNHCR, which has played a critical role in funding and disseminating research in this field, and the growing political saliency of immigration in the United States and Europe. To better understand these studies, we classified them by empirical methodologies, focus areas, and target populations (host communities or forcibly displaced populations). These classifications reveal several important trends. First, in terms of methodologies, there has been a notable shift from traditional approaches, such as matching, and reduced-form estimations, to more advanced techniques like difference-in-differences, randomized controlled trials (RCTs), and regression discontinuity designs (Figure 5). Moreover, instrumental variables have had a prominent role in this body of work throughout the period of analysis. This evolution reflects the growing rigor and precision in evaluating displacement impacts and policy interventions. Second, regarding research topics, some areas—such as labor markets—have remained consistently prominent. 6 However, others have gained significant momentum in recent years, including social cohesion, crime, welfare, children, and gender dynamics (Figure 6). These newer topics indicate a broader recognition of the multidimensional impacts of forced displacement on both host communities and displaced populations. Finally, in terms of population focus, earlier studies primarily concentrated on the effects of forced displacement on host communities. More recent research, however, increasingly examines the experiences of forcibly displaced populations themselves, alongside the effectiveness of policies designed to support them (Figure 7). We classify these two bodies of work as first-generation and second- generation studies, respectively, and explore their main findings in the sections that follow. 4 Which includes formal publication in a journal or a working paper version. 5 Some of these initiatives include the Venezuelan Panel Refugee Study, the Syrian Refugee Life Study, the Cox’s Bazar Panel Survey, and the Kenya Longitudinal Socioeconomic Study of Refugees and Host Communities. 6 Some papers identify impacts on multiple topics, hence, we include them under all the relevant topics they examine. 8 Figure 5. Evolution of Research Methods in Forced Displacement Studies, 2010–2024 Panel A. Trends Panel B. Cumulative Notes: The figure displays the total number of studies published monthly from 2010 to 2024 that employ experimental or quasi- experimental approaches. Quasi-experimental methods include Difference-in-Differences (DiD), Instrumental Variables (IV), Matching techniques, Regression Discontinuity Designs (RDD), and Reduced Form analyses (using an exogenous proxy variable). Experimental methods refer to Randomized Controlled Trials (RCTs) and Conjoint Experiments. Figure 6. Trends in Research Topics on Forced Displacement, 2010–2024 Panel A. Trends Panel B. Cumulative Notes: The figure illustrates the monthly distribution of studies from 2010 to 2024, categorized by primary topics. Children and Gender includes studies examining the impact of forced displacement on children and women. Consumption encompasses analyses of average consumption and food expenditure. Crime covers studies on crime rates, conflict recruitment, and arrests. Economic Development includes research on firm performance, firm creation and destruction, gross profit, net sales, business registrations, sectoral development, export and import performance, productivity improvements, business openness, patenting activity, infrastructure advancements (e.g. road improvements), environmental impacts (e.g. agricultural development, deforestation), and changes in night light density. Education includes studies on educational outcomes. Health captures effects on general health, healthcare access, and mental health. Housing considers housing prices, rent, and housing quality. Labor covers labor force participation, employment, wages, hours worked, and formal versus informal labor. Political Outcomes includes political participation, voting shifts for left, center, and right parties, political competition, and party support changes. Social Cohesion examines attitudes toward refugees, government and migration, social exclusion, redistribution support, trust, reciprocity, altruism, migration intentions and patterns, anti-refugee violence, and xenophobic crimes. Welfare includes studies on poverty rates, financial and psychological well-being, self-reliance, access to services and subsidies, social protection systems, and quality of life. Some papers identify impacts on multiple topics; we include them under all the relevant topics they examine. 9 Figure 7. Population Focus on Forced Displacement Studies: Refugees vs. Host Communities, 2010–2024 Panel A. Trends Panel B. Cumulative Notes: Panel A figure presents the monthly distribution of studies from 2010 to 2024, categorized by target population (host economy, host population, and refugees). Topics analyzed in the host economy focus include crime, firm entry, firm performance, market structure, environmental impact, housing conditions, rental and housing prices, nightlight density, firm production margins, export performance, business formation, inflation, foreign trade, firm hiring decisions (especially regarding refugees), tax impacts, firm quality, and investment effects. Studies also cover licensed business revenues, agricultural productivity, deforestation, transport costs, household wealth, educational attainment, sectoral financial growth, total factor productivity, and labor market adjustments to supply and demand shocks. Research focusing on the host population addresses attitudes toward refugees, labor outcomes, xenophobic crime, welfare, and income diversification. In studies centered on refugees, topics include integration, fertility decisions, participation in local programs, sectoral employment, poverty rate and overall quality of life. Panel B figure presents the total studies from 2010 to 2024, categorized by target population (host economy, host population, and refugees). IV. FIRST-GENERATION EVIDENCE: HOW FORCED MIGRATION AFFECTS HOST COMMUNITIES This section explores the evidence produced between 2010 and 2024 on the effects of forced migration on host communities, focusing on labor markets, public services, political dynamics, and social cohesion. While forced migration often poses short-term challenges, such as labor market disruptions and pressure on public services, it also creates opportunities for long-term economic growth, political shifts, and improved social integration when resources and policies are adjusted effectively. A. Labor Markets and Economic Growth: Short-Term Challenges, Long-Term Opportunities Recent evidence on the effects of forced displacement on labor markets largely focuses on how refugees impact native labor market outcomes. A substantial number of studies find neutral effects in the short run, particularly on overall employment and wages for native workers (Akgündüz et al. 2015, Peri and Yasenov 2017, Olivieri et al. 2021, Gehrsitz and Ungerer 2022, Postepska and Voloshyna 2024). However, small but negative effects have been observed among certain vulnerable groups, particularly informal workers and other migrants who directly compete with refugees for low-skilled jobs in the informal sector (Calderon-Mejia and Ibáñez 2015, Alix-Garcia and Bartlett 2015, Bahcekapili and Cetin 2015, Borjas and Monras 2017, Ceritoglu et al. 2017, Bagir 2018, Malaeb and Wahba 2018, Clemens and Hunt 2019, Caruso et al. 2021). These negative effects are often concentrated among low-skilled workers, particularly women 10 (Bagir 2018, Morales 2018, Aracı et al. 2022, Shamsuddin et al. 2022) and youth (Ceritoglu et al. 2017, Olivieri et al. 2021), who are more likely to experience reduced employment opportunities and downward wage pressures. In contrast, workers with skills complementary to those of refugees often benefit from refugee migration, as seen in cases where occupational mobility improves or labor demand shifts (Foged and Peri 2016, Fallah et al. 2019, Aracı et al. 2022, Shamsuddin et al. 2022). The impact on businesses also varies depending on the sector and formality of operations. Self-employed individuals and small businesses in the informal sector often struggle due to increased competition with refugee workers (Rozo and Winkler 2019). By contrast, formal businesses frequently thrive in response to refugee migration, benefiting from increased consumer demand and lower labor costs (Labanca 2020, Berbée et al. 2022). Additionally, investments and firm growth tend to occur in sectors that align with refugee-origin countries' traditional strengths, as well as in service-oriented industries such as food, hospitality, and restaurants, which thrive due to rising demand from both refugees and host communities (Schuman 2017, Altindag et al. 2020, Akgündüz et al. 2023). This dual effect—boosted demand and reduced labor costs—highlights the nuanced and often sector-specific nature of labor market responses to refugee migration. More broadly, refugee migration shocks have been shown to generate positive economic effects in the medium to long run (Sarvimäki 2011, Schumann 2017). These benefits are largely driven by the persistence of the population shock, which stimulates economic activity and contributes to long-term growth in host communities. B. Public Services: Education and Health Congestion pressures often arise in sectors such as education provision when local supply and public resources fail to adjust to the increased demand caused by forced migration (Contreras and Gallardo 2022, Rozo and Vargas 2024). These pressures can lead to displacement effects, where native populations shift from public to private services due to overcrowding and reduced quality. For instance, in the case of education, studies have shown that refugee inflows can push native students into private schools when public systems are not adequately expanded (Tumen 2019, Rozo and Vargas 2024). However, when resources are adjusted to meet the rising demand—through expanded infrastructure or increased funding—there is little evidence of adverse effects on native populations (Morales 2022, Assad et. al 2023). In terms of health outcomes, the evidence highlights both challenges and opportunities associated with forced migration. On one hand, refugee inflows can contribute to the spread of vaccine-preventable diseases if displaced populations are excluded from public health services (Ibáñez et al. 2021). On the other hand, integrating refugees and displaced populations into public health systems, particularly through programs like vaccination campaigns, has been shown to effectively mitigate these risks and improve overall health outcomes (Muñoz Blanco and Frattini 2024). These findings underscore the importance of inclusive health policies that address the needs of both native and displaced populations to ensure shared public health benefits. 11 C. Political Effects Most of the evidence on the political effects of forced migration focuses on refugee migration. In developed countries, evidence consistently shows that an increase in refugee migration leads to greater support for anti-immigration agendas and a shift in voter preferences away from left-leaning parties toward right-wing parties (Barone et al. 2016, Harmone 2016, Halla et al. 2017, Dustmann et al. 2018, Edo et al. 2019, Dinas et al. 2019, Bratti et al. 2020, Campo et al. 2021, Steinmayr 2021). These political effects tend to be stronger in affluent areas, where local populations may perceive refugees as a threat to economic or social stability. However, the effects are less pronounced in regions with a history of exposure to previous immigration waves, suggesting that familiarity with migrants can reduce opposition (Campo et al. 2023). In developing countries, the political effects of forced migration are generally more neutral or context- dependent (Fisunoğlu and Sert 2018, Altindag and Kaushal 2020). In some cases, forced migration can have positive political outcomes when it is accompanied by increased humanitarian aid and improved public services, which benefit both refugees and host communities (Zhou et al., 2024). However, the dynamics can also vary significantly. For instance, in Colombia, the arrival of Venezuelan refugees led to increased support for right-wing parties. This shift occurred because the migration influx made the failures of the República Bolivariana de Venezuela's leftist regime—seen as responsible for the crisis—more salient in public discourse (Rozo and Vargas 2023). These findings highlight the complexity of political outcomes driven by forced migration, showing that local economic conditions, prior exposure to migration, and the quality of humanitarian interventions play a critical role in shaping political responses. D. Attitudes, Perceptions, and Social Cohesion The existing evidence on the social effects of forced migration focuses primarily on refugee migration. Generally cultural proximity between host communities and refugees plays a significant role in shaping perceptions and attitudes toward migrants. When hosts and refugees share cultural, linguistic, or religious similarities, acceptance tends to be higher, while greater cultural distance often leads to more resistance (Alrababa’h et al. 2020; Barron et al. 2022). 7 However, perceptions are not solely driven by cultural factors—considerations related to refugees' employability and their potential economic contributions are also important in influencing attitudes (Bansak et al. 2016). Negative attitudes and perceptions are more prominent among individuals who are in direct competition with refugees for economic opportunities. This includes groups such as young males, people with lower wealth, and those employed in blue-collar occupations, where labor market competition is often more intense (Rozo and Urbina 2022, Aksoy 2023). These groups may perceive refugees as a threat to job security, wages, or overall economic well-being, which can exacerbate negative sentiment. 7 Although this is generally true, this is not always the case. In fact, violence against a marginalized migrant population can be prevalent even when hosts and refugees share cultural and religious markers, as has been the case in South Africa (Kerr et al. 2019) and Colombia (Knight and Tribin 2023). 12 Nevertheless, recent suggestive cross-country evidence provides a different perspective. A study examining refugee arrivals over a 14-year period in low- and middle-income countries finds little evidence that large-scale refugee inflows have significant short-term negative impacts on host communities' attitudes toward immigrants (Aksoy et al. 2022). While the findings are both useful and provocative, the study relies on a single measure—whether respondents consider their area a good place for immigrants to live. Future research should expand on this analysis by incorporating additional questions on migrant and refugee acceptance in nationally representative surveys. These findings emphasize the complexity of host attitudes, where cultural, economic, and demographic factors interact to shape responses to refugee arrivals. Understanding these mediators is crucial for designing policies that foster positive host-refugee relations and minimize tensions in receiving communities. E. Key Takeaways for Policy Makers: Lessons from First-Generation Evidence The evidence on the effects of forced displacement reveals a wide range of outcomes across labor markets, public services, political dynamics, and social cohesion. In labor markets, most studies find neutral short-term effects on native employment and wages, although vulnerable groups, such as informal workers, women, and youth, often experience small but negative impacts due to increased competition. Conversely, workers with complementary skills and formal businesses often benefit from refugee migration through increased occupational mobility, demand-driven growth, and reduced labor costs. Public services, such as education and health, can experience congestion when resources fail to adjust to increased demand, leading to displacement effects for natives. However, evidence shows that proactive investments in infrastructure and inclusive policies, such as expanding health services and vaccination programs, mitigate these pressures and improve outcomes for both host and displaced populations. Politically, refugee migration often drives support for anti-immigration agendas and right- wing parties in developed countries, particularly in affluent regions. In contrast, political effects in developing countries are more neutral or context-specific, with positive outcomes linked to increased humanitarian aid and service provision. Finally, host communities’ attitudes and perceptions toward refugees are shaped by factors such as cultural proximity, economic competition, and historical exposure to migration. V. SECOND-GENERATION EVIDENCE: SUPPORTING FORCED MIGRANTS AND HOST COMMUNITIES When evaluating policies designed to improve the well-being of forced migrants and host communities, two critical questions arise. First, what distinguishes the challenges faced by forced migrants from other forms of poverty and vulnerability? Second, can lessons from social protection programs for other vulnerable populations be effectively applied to forced migrants and their host communities? The answers to these questions lie in the unique vulnerabilities of forced migrants and the social cohesion challenges that can arise in host communities upon their arrival. Refugees are among the most vulnerable populations globally. They often arrive with no assets and face significant uncertainty about their rights, legal status, and access to social services. Many have endured traumatic events that led to their displacement and difficult journeys, resulting in a high prevalence of mental health issues. In their host communities, they frequently confront language barriers and discrimination, which compound their difficulties. These distinct challenges mean that social programs may have varying levels of effectiveness for refugees compared to other vulnerable groups. This section summarizes key research findings on 13 policies designed to enhance forced migrants’ well-being and promote positive interactions with host communities. The section focuses on research on the case of refugees, where most evidence is available. A. Humanitarian Support: Cash Transfers Evidence consistently demonstrates that cash transfers have short-term positive impacts on the well- being of refugees. These benefits include increased household consumption and expenditures (Hidobro 2014, Ozler et al. 2021, Altındağ and O'Connell 2023, Gupta et al. 2024), improved employment and wage prospects (LoPalo 2019, Quinn 2024), reduced child labor, higher school enrollment (Lehrer 2010, Moussa et al. 2022, Black et al. 2022, Hızıroğlu Aygün et al. 2024) and enhanced psychological well-being (Quattroci et al. 2022). Evidence from Kenya highlights the effectiveness of unconditional cash transfers in significantly improving subjective well-being (Siu et al. 2023). Longer program durations further amplify these benefits, resulting in greater increases in consumption (Salti et al. 2022). However, research also indicates that the positive effects of cash transfers may not persist once the programs end (Altındağ and O’Connell 2024). These findings underscore the importance of designing humanitarian programs not just as temporary relief measures but as components of broader, medium- to long-term strategies aimed at achieving durable solutions. Pairing cash transfer programs with complementary measures, such as labor market integration and initiatives that enhance self-reliance, can potentially improve their overall effectiveness and sustainability. B. The Right to Work and Labor Market Integration for Refugees Extensive evidence highlights the positive effects of labor market integration on the well-being of refugees. Employment not only provides economic stability but is also critical for maintaining positive mental health among refugees (Kenley et al. 2023). Programs that facilitate labor market integration— such as those offering skill development, job search assistance, and language training—deliver substantial benefits for both refugees and their children. These benefits include better mental health, higher income, and improved educational outcomes (Marbach et al. 2018, Hvidtfeldt et al. 2018, Sarvimaki and Hamalainen 2016, Hainmueller et al. 2016, Battisti et al. 2019, Lochmann et al. 2019, Heller and Mumma 2020, Dalhelberg et al. 2021, Foged and Van der Werf 2023, Foged et al. 2023, Arendt et al. 2024). Conversely, restrictive employment policies have long-term negative effects, with adverse labor market outcomes for refugees often persisting even after the restrictions are lifted (Ahrens et al. 2023). Policies that delay asylum processes exacerbate these challenges, resulting in significant long-term disadvantages in labor market outcomes for refugees (Hainmueller et al. 2016, Hvidtfeldt et al. 2018, Fasani et al. 2021). Building on these findings, Colombia’s regularization program for Venezuelan forced migrants provides a compelling example of how enabling labor market access can yield widespread benefits. The program, which granted forced migrants full mobility, work permits, and access to social services, significantly improved the well-being of forced migrants without adversely affecting host communities. Research shows no negative impact on Colombian workers’ employment, wages, or labor force participation (Bahar et al. 2021). Similarly, the program had no significant effects on electoral outcomes or social cohesion, with voters largely indifferent to the policy (Rozo et al. 2023). On the other hand, forced migrants benefited greatly, experiencing a 48% increase in per capita consumption, a 22% rise in monthly income, improved health outcomes, and enhanced resilience during the COVID-19 pandemic (Ibáñez et al. 2024, Urbina et al. 2023). Additional advantages included reduced crime incidence (Ibáñez et al., 2024) and reduced fertility rates due to better family planning access and increased entrepreneurship among regularized migrants (Amuedo-Dorantes et al. 2023, Bahar et al. 2023). However, challenges remain. Many migrants sought regularization primarily to access healthcare, leading to persistently low levels of 14 labor market formalization. Furthermore, issues like occupational downgrading continue to hinder progress (Garcia-Suaza et al. 2024). Similarly, in Kenya, research by MacPherson and Sterck (2021) contrasts two refugee assistance models: the Kalobeyei settlement and the Kakuma refugee camp. In Kakuma, refugees were confined to camps with limited opportunities for income-generating activities, relying largely on in-kind food rations. In contrast, the Kalobeyei model embraced a development-oriented approach, replacing most in-kind food rations with mobile-money transfers through the Bamba Chakula system and encouraging small-scale agriculture. Refugees in Kalobeyei reported significantly better dietary diversity, improved food security, and higher calorie intake. Additionally, they expressed greater happiness and a sense of independence from humanitarian aid compared to those in Kakuma. However, despite these successes, the study found no significant effects on asset accumulation or non-food expenditures, underscoring the ongoing challenges of fostering broader economic self-reliance within restrictive refugee-hosting environments. Programs that integrate multiple support mechanisms also show great promise. In Uganda, Ginn et al. (2024) evaluated a program that combined cash grants with group-based business mentorship for micro- entrepreneurs, including refugees. These mentorship groups fostered peer support and information- sharing while offering incentives for collaborative success. Results showed significant improvements in business outcomes and profits, with mentorship providing added benefits, particularly for male participants. A similar approach in Denmark matched refugees to occupations facing local labor shortages and provided basic job training (Foged et al. 2022). This initiative increased refugee employment rates by 5–6 percentage points within the first year and by 10 percentage points after two years, proving particularly effective for male refugees and those with some secondary education. These findings demonstrate the potential of innovative, multi-dimensional programs to address labor shortages while promoting economic integration. C. Addressing Trauma: The Critical Role of Mental Health in Refugee Integration A fundamental challenge for forced migrants worldwide is the high prevalence of mental health issues. These often arise from traumatic experiences in their countries of origin, perilous migration journeys, and the discrimination they face in host communities. Mental health is not only critical for the overall well- being of forced migrants but also essential for their successful integration into labor markets. Poor mental health has significant economic consequences, with recent research showing that a one-standard- deviation increase in psychological distress reduces refugees' probability of employment by nearly 12% and weekly earnings by over 20% (Dang et al. 2023). Addressing these challenges requires robust governmental support and targeted interventions to mitigate the negative effects of psychological distress and facilitate better integration outcomes. Promising interventions are being developed to address these mental health challenges and improve outcomes for forced migrants and their families. Parenting and mental health support programs have demonstrated considerable success in enhancing both caregiver and child well-being. For instance, a psychosocial program for Rohingya refugee mothers in Bangladesh, which included psychoeducation and play-based activities, significantly reduced psychological trauma and depression among mothers while improving children’s cognitive, motor, and emotional development (Islam et al. 2024). Similarly, in Colombia, a program targeting caregivers in conflict-affected settings showed that improving caregiver 15 mental health directly enhanced early childhood development, fostering stronger child-caregiver interactions and reducing toxic stress among children (Moya et al. 2024). To overcome stigma barriers to mental health care, innovative approaches have been developed. A field experiment with Syrian refugees in Jordan demonstrated the effectiveness of using peer “senders” to share information about mental health services. This approach significantly increased outreach by leveraging social cover, wherein senders disclosed financial compensation for sharing information, thus bypassing stigma (Smith 2024). Such interventions highlight the need to address both psychological and social barriers to accessing mental health care for displaced populations, ensuring that mental health services are both accessible and acceptable. D. Bridging Divides: Strategies to Strengthen Social Cohesion in Refugee-Host Dynamics Another significant challenge faced by forcibly displaced populations is the discrimination and negative attitudes they often encounter in host communities. These reactions create barriers to labor market opportunities, reduce access to education, and adversely affect mental health, compounding the vulnerabilities of displaced individuals. Addressing these challenges requires designing and evaluating policies that improve social cohesion between host communities and forced migrants, fostering environments where both groups can thrive. Promising interventions to reduce stereotypes and foster inclusion have demonstrated significant potential across various contexts. For instance, programs targeting biases in schools have shown meaningful impacts. Revealing implicit biases to teachers using Implicit Association Tests (IAT) has proven effective in reducing discriminatory grading behaviors. Teachers made aware of their own stereotypes adjusted their behavior more significantly than those who received general debiasing messages, closing the grade gap between native and immigrant students (Alesina et al. 2024). Similarly, teacher training programs focused on diversity awareness in Türkiye nearly halved the absenteeism gap between native and refugee students, with the effects persisting into the next academic year. These findings emphasize the crucial role of education-based initiatives in promoting broader inclusion and fostering long-term awareness across school systems (Tumen et al. 2023). Beyond education, framing information about humanitarian aid sources has emerged as a powerful strategy to shift perceptions. Research from Uganda and Kenya demonstrates that explicitly linking aid grants for host communities to refugee integration policies can improve host community attitudes toward refugees. This approach fosters greater acceptance and support for policies like work rights and freedom of movement (Baseler et al. 2024). Empathy-driven interventions also show promise. Perspective-taking exercises, where participants imagine themselves in the shoes of refugees, significantly improved inclusionary behaviors, such as increased support for refugees in the United States (Adida et al. 2018). Similarly, in Colombia, online interventions using video narratives and interactive games enhanced trust and prosocial behaviors toward Venezuelan forced migrants, illustrating the scalability of low-cost, empathy-based approaches (Rozo and Rodriguez 2024). While interesting, the evidence around the effectiveness of perspective taking is based on survey experiments, which has some limitations related to the perceived demand effects of respondents, for example. Future work should aim at testing prejudice reduction methods such as perspective taking in field settings. The effectiveness of intergroup contact between displaced populations and host communities, however, remains mixed. In Mozambique, structured dialogue between internally displaced persons (IDPs) and local 16 hosts significantly improved social cohesion. Participants in joint community meetings reported greater tolerance, reduced discriminatory attitudes, and strengthened mutual trust in both the short and medium term (Barros 2024). Conversely, in Afghanistan, a vocational training program fostering prolonged intergroup contact through collaborative skill-building activities showed no measurable impact on locals’ attitudes or behaviors toward IDPs, even after extensive interaction. This underscores the difficulty of overcoming deeply entrenched stereotypes and resource competition in conflict settings, where sustained contact alone may be insufficient (Zhou and Lyall 2024). Recent evidence also highlights the unintended consequences of aid programs that exclude host communities. For example, in Jordan, a housing subsidy program for Syrian refugees unintentionally strained relations with Jordanian neighbors. Visible improvements in refugee housing amplified perceptions of inequity, leading to a significant decline in social cohesion and increased resentment toward aid recipients (Tamim et al. 2024). By contrast, programs that indirectly benefit host communities have mitigated such tensions. In Lebanon, cash transfer programs boosted local spending, indirectly improving host community well-being and reducing anti-refugee hostility (Lehman and Masterson 2020). Inclusive programs that directly benefit both refugees and host communities, such as those implemented in Mozambique, have also shown positive effects on trust and social cohesion. However, these gains remain fragile and vulnerable to external shocks, such as climate-induced disasters, which exacerbate resource scarcity and competition (Beltramo et al. 2023). These findings underscore the importance of designing aid programs that incorporate host communities as stakeholders. Inclusive approaches not only improve social cohesion but also enhance the sustainability of humanitarian interventions, reducing the risk of tensions and ensuring longer-term success. E. Key Takeaways for Policy Makers: Lessons from Second-Generation Evidence Second-generation evidence underscores the importance of designing policies that move beyond short- term humanitarian relief to foster long-term resilience and integration. Humanitarian assistance, while essential for immediate needs, should be paired with initiatives that build economic self-reliance. Labor market integration has proven transformative, yielding higher incomes, better mental health, and reduced dependency on aid. Successful models, like Colombia's regularization program, show the potential for mutually beneficial outcomes for both migrants and hosts. Mental health challenges, a critical barrier to refugee integration, require targeted interventions that not only improve individual well-being but also enhance employability and community stability. Furthermore, inclusive policies that share the benefits of aid between refugees and host communities are vital for maintaining social cohesion. Examples from Uganda and Lebanon demonstrate that when both groups see tangible benefits, tensions diminish, and trust grows, highlighting the risks of exclusionary approaches that can exacerbate divisions. VI. CONCLUSIONS AND POTENTIAL DIRECTIONS FOR FUTURE RESEARCH The literature on forced displacement highlights that no single solution is universally applicable. Policies must be tailored to the specific resources, institutional capacities, and cultural contexts of both host populations and forcibly displaced individuals. Countries such as Colombia and Uganda have adopted inclusive models that empower refugees through rights to work and access to services, showcasing the potential for transformative outcomes. Similarly, Kenya and Ethiopia are moving toward development- oriented approaches. In contrast, nations like Jordan have opted for more cautious, gradual strategies, balancing short-term needs with long-term stability. Despite these differences, several common lessons emerge from the evidence: 17 1. Humanitarian aid as a bridge to self-reliance. Immediate humanitarian aid is critical for addressing the urgent needs of forcibly displaced populations, yet its effectiveness is limited without pathways toward medium- and long-term self-sufficiency. Programs that integrate cash transfers with opportunities for education, skills training, and labor market access can help displaced individuals rebuild their lives while contributing to host economies. For example, models in Uganda and Colombia demonstrate how combining humanitarian assistance with rights-based policies can reduce dependency and foster resilience. 2. Inclusive models to prevent social friction. Policies that exclude host communities from the benefits of aid risk fostering resentment and eroding social cohesion. Evidence suggests that integrating support for refugees with parallel investments in host communities—such as shared infrastructure or joint economic opportunities—can mitigate tensions and enhance trust. Programs that explicitly include both groups, such as those linking aid to broader development goals in Uganda and Lebanon, have been particularly successful in reducing hostility and promoting cooperation. 3. Addressing mental health. Mental health challenges are among the most pressing issues faced by forcibly displaced populations. These challenges—stemming from traumatic experiences and compounded by the stresses of displacement—not only impair individual well-being but also hinder successful integration into host societies. Promising interventions, such as mental health support programs for parents, highlight the potential importance of holistic approaches that address the emotional and psychological needs of displaced individuals and their families. 4. Combating discrimination. Discrimination is another critical barrier that prevents effective integration. Forcibly displaced populations often face biases and exclusion, which limit their access to opportunities and resources. By combating discrimination through public awareness campaigns, the implementation of inclusive policies, and the promotion of perspective taking or positive intergroup contact, more welcoming environments can be fostered. Although research on forced displacement is expanding rapidly, several critical areas would benefit from further investigation. One such area is the impact of displacement on origin communities, where initial evidence points to severe developmental consequences, including disrupted economies, weakened social cohesion, and political instability. Understanding these dynamics is crucial for mitigating long-term harm and fostering recovery in affected regions. Equally important is addressing the unique vulnerabilities of displaced children, whose education, mental health, and development are often jeopardized by displacement. Developing targeted strategies to protect their well-being and prevent the emergence of a "lost generation" is essential for building resilience among forced migrant populations. Furthermore, there is a pressing need for more research on the effectiveness of programming for IDPs and returned migrants, as evidence in these areas remains limited. 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The review aims to comprehensively capture literature from 2010 onward. The papers are categorized into several key themes: Firms, Prices and Welfare, Labor, Hosts, Climate Change, Education, Politics, Asylum-Dispersal Policies, Literature Reviews, Gender, Health, Housing, Networks and Social Cohesion, and Crime. The process began with a general search on Google Scholar to identify foundational papers related to refugee and forced displacement populations worldwide. Subsequently, a targeted search was conducted within the top five economic journals—The American Economic Review, Econometrica, the Journal of Political Economy, the Quarterly Journal of Economics, and the Review of Economic Studies—to identify studies addressing refugee-related topics. Building on these initial findings, the review expanded to include field-specific journals that focus on migration and development. The primary journals consulted were the International Migration Review, the Journal of Development Economics, and the Journal of Population Economics. Among these, the Journal of Development Economics emerged as the most prolific source of economic literature on the subject. Additionally, the IZA Discussion Paper Series was utilized as a significant resource, given its extensive collection of working papers on this topic. Many papers identified through the IZA repository had already been published in peer-reviewed journals, further enhancing the robustness of the pool of articles. To refine the review and ensure comprehensiveness, the cited references within the literature reviews of each article were analyzed to identify additional works directly relevant to the objectives of this study. We included all the papers in the Online Appendix published with the literature review. 38 Appendix B – World Refugee and Asylum Policies Data The Dataset of World Refugee and Asylum Policies (DWRAP) is a novel dataset that compiles all national laws relevant to forcibly displaced populations across a sample of 205 countries from 1951 to 2022. It includes a total of 951 unique national-level migration laws. Specifically, the dataset captures de jure policies on asylum and forced migration, offering an objective measure by relying on legal texts rather than subjective interpretations of policy enforcement. In developing DWRAP, countries were selected for inclusion based on the United Nations geoscheme. The dataset encompasses all nations within the following regions: Eastern Africa, Middle Africa, Northern Africa, Southern Africa, Western Africa, Western Asia, Central Asia, and Southern Asia. Refugee and asylum policies are conceptualized as a set of provisions regulating five core dimensions: (1) access, which reflects the ease of entry and security of legal status; (2) services, covering the provision of public services and welfare; (3) livelihoods, representing the ability to work and own property; (4) movement, addressing encampment policies; and (5) participation, which includes pathways to citizenship and political rights. For each law, DWRAP codes 54 provisions across these five dimensions. Each of the 54 variables is measured on an ordinal scale, coded as discrete values from 0 to 3, where higher scores indicate more liberal policy measures. For instance, a score of 2 reflects a more liberal measure than 1, which in turn is more liberal than 0. To aggregate these provisions, Principal Component Indices are constructed, consolidating the data from individual policy provisions into 14 policy strands, from 14 strands into the five core dimensions, and finally, into an overall policy score. Each index is normalized to range from 0 to 1, facilitating comparisons of policy regimes across countries and over time. By constructing these indices, DWRAP provides a comprehensive and standardized tool for analyzing refugee and asylum policies globally. Figure B1. Access Index Panel A. Index Evolution by Continent 39 Panel B. Average Index between 1951 to 2021 Notes: Data is sourced from the Dataset of World Refugee and Asylum Policies (DWRAP). Panel A of the figure displays the evolution of the Access Index from 1951 to 2021, disaggregated by continent. Panel B shows the average value of the index from 1951 to 2021 across countries. The Access Index is a principal component index reflecting the ease of entry and security of legal status. The index ranges from 0 to 1, with higher values indicating more liberal policies. Figure B2. Service Access Index Panel A. Index Evolution by Continent 40 Panel B. Average Index between 1951 to 2021 Notes: Data is sourced from the Dataset of World Refugee and Asylum Policies (DWRAP). Panel A of the figure displays the evolution of the Service Access Index from 1951 to 2021, disaggregated by continent. Panel B shows the average value of the index from 1951 to 2021 across countries. The Service Access index covers the provision of public services and welfare. The index ranges from 0 to 1, with higher values indicating more liberal policies. Figure B3. Livelihood Index Panel A. Index Evolution by Continent 41 Panel B. Average Index between 1951 to 2021 Notes: Data is sourced from the Dataset of World Refugee and Asylum Policies (DWRAP). Panel A of the figure displays the evolution of the Livelihood Index from 1951 to 2021, disaggregated by continent. Panel B shows the average value of the index from 1951 to 2021 across countries. The Livelihood Index is a principal component index representing the ability to work and own property. The index ranges from 0 to 1, with higher values indicating more liberal policies. Figure B4. Movement Policies Index Panel A. Index Evolution by Continent 42 Panel B. Average Index between 1951 to 2021 Notes: Data is sourced from the Dataset of World Refugee and Asylum Policies (DWRAP). Panel A of the figure displays the evolution of the Movement Index from 1951 to 2021, disaggregated by continent. Panel B shows the average value of the index from 1951 to 2021 across countries. The Movement Index is a principal component index comprising movement which addresses the encampment policies. The index ranges from 0 to 1, with higher values indicating more liberal policies. Figure B5. Political Rights Index Panel A. Index Evolution by Continent 43 Panel B. Average Index between 1951 to 2021 Notes: Data is sourced from the Dataset of World Refugee and Asylum Policies (DWRAP). Panel A of the figure displays the evolution of the Political Rights Index from 1951 to 2021, disaggregated by continent. Panel B shows the average value of the index from 1951 to 2021 across countries. The Political Rights Index is a principal component index comprising political participation, including citizenship and political rights. The index ranges from 0 to 1, with higher values indicating more liberal policies. 44