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The Economic and Fiscal Effects of Granting Refugees Formal Labor Market Access

Author

Listed:
  • Michael Clemens

    (Center for Global Development)

  • Cindy Huang

    (Center for Global Development)

  • Jimmy Graham

    (Center for Global Development)

Abstract

There are over 25 million refugees in the world today and most of them—especially those in developing countries—do not have formal labor market access (LMA). That is, they do not have the right to work or own businesses. In this paper, we argue that granting refugees formal LMA has the potential to create substantial benefits for refugees and their hosts, including reduced vulnerability and higher incomes for refugees, improved labor market outcomes and higher incomes for natives, and positive fiscal effects for the host governments. Overall, even short of formal LMA according to our definition—wherein refugees’ access to the labor market is unrestricted by the government in law and in practice—greater rights around work and business ownership enable greater benefits. Moreover, the fewer barriers there are to realizing these rights in practice—whether related to government policy or otherwise—the greater the benefits. But there may also be costs associated with granting formal LMA for certain groups in the host population and the full range of benefits is not guaranteed. The existence and magnitude of these benefits and costs is determined by key contextual factors, including the current extent of informal LMA for refugees, characteristics of the labor market, the skill and demographic profiles of refugees, the geographic location and concentration of refugees, and, crucially, policy choices and the political context. By creating and implementing policies that support vulnerable people regardless of status, help natives adjust to and benefit from changes, facilitate refugee labor market integration, and grant refugees the complementary rights that will help them succeed (such as freedom of movement), policymakers can amplify the benefits of formalization and mitigate the costs—making formal LMA a critical lever for generating positive outcomes from the presence of refugees.

Suggested Citation

  • Michael Clemens & Cindy Huang & Jimmy Graham, 2018. "The Economic and Fiscal Effects of Granting Refugees Formal Labor Market Access," Working Papers 496, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:496
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    Citations

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    Cited by:

    1. Shamsuddin,Mrittika & Acosta,Pablo Ariel & Battaglin Schwengber,Rovane & Fix,Jedediah Rooney & Pirani,Nikolas, 2021. "Integration of Venezuelan Refugees and Migrants in Brazil," Policy Research Working Paper Series 9605, The World Bank.
    2. Di Iasio, Valentina & Wahba, Jackline, 2024. "The Determinants of Refugees’ Destinations: Where do refugees locate within the EU?," World Development, Elsevier, vol. 177(C).
    3. Albarosa, Emanuele & Elsner, Benjamin, 2023. "Forced Migration and Social Cohesion: Evidence from the 2015/16 Mass Inflow in Germany," IZA Discussion Papers 15850, Institute of Labor Economics (IZA).
    4. Shamsuddin, Mrittika & Acosta, Pablo A. & Schwengber, Rovane Battaglin & Fix, Jedediah & Pirani, Nikolas, 2022. "The Labor Market Impacts of Venezuelan Refugees and Migrants in Brazil," IZA Discussion Papers 15384, Institute of Labor Economics (IZA).
    5. Sergio Olivieri & Francesc Ortega & Ana Rivadeneira & Eliana Carranza, 2022. "The Labour Market Effects of Venezuelan Migration in Ecuador," Journal of Development Studies, Taylor & Francis Journals, vol. 58(4), pages 713-729, April.
    6. Becker, Sascha O. & Ferrara, Andreas, 2019. "Consequences of forced migration: A survey of recent findings," Labour Economics, Elsevier, vol. 59(C), pages 1-16.
    7. Murard,Elie, 2022. "Long-Term Effects of the 1923 Mass Refugee Inflow on Social Cohesion in Greece," Policy Research Working Paper Series 9912, The World Bank.
    8. Swati M. Dhawan & Kim Wilson & Hans-Martin Zademach, 2022. "Formal Micro-Credit for Refugees: New Evidence and Thoughts on an Elusive Path to Self-Reliance," Sustainability, MDPI, vol. 14(17), pages 1-21, August.
    9. Demirci, Murat & Kırdar, Murat Güray, 2023. "The labor market integration of Syrian refugees in Turkey," World Development, Elsevier, vol. 162(C).
    10. Campo, Francesco & Giunti, Sara & Mendola, Mariapia, 2021. "The Refugee Crisis and Right-Wing Populism: Evidence from the Italian Dispersal Policy," IZA Discussion Papers 14084, Institute of Labor Economics (IZA).
    11. C. Annique Un & Chhomran Ou & Silvy Un Lafayette, 2022. "From the liability to the advantage of refugeeness," Journal of International Business Policy, Palgrave Macmillan, vol. 5(4), pages 530-561, December.
    12. Olivieri, Sergio & Ortega, Francesc & Rivadeneira, Ana & Carranza, Eliana, 2020. "Shoring up Economic Refugees: Venezuelan Migrants in the Ecuadorian Labor Market," IZA Discussion Papers 13502, Institute of Labor Economics (IZA).
    13. Murard, Elie, 2023. "Long-term effects of the 1923 mass refugee inflow on social cohesion in Greece," World Development, Elsevier, vol. 170(C).
    14. Emanuele Albarosa & Benjamin Elsner, 2023. "Forced Migration and Social Cohesion: Evidence from the 2015/16 Mass Inflow in Germany," SOEPpapers on Multidisciplinary Panel Data Research 1183, DIW Berlin, The German Socio-Economic Panel (SOEP).
    15. Albarosa, E. & Elsner, B., 2023. "Forced Migration and Social Cohesion: Evidence from the 2015/16 Mass Inflow in Germany," World Development, Elsevier, vol. 167(C).

    More about this item

    Keywords

    refugees; benefits; formalization; labor market access; work rights; freedom of movement; impact; labor; wages; employment; fiscal effects; productivity; CRRF; Global Compact;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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