Do Refugees with Better Mental Health Better Integrate ? Evidence from the Building a NewLife in Australia Longitudinal Survey

Hardly any evidence exists on the effects of mental illness on refugee labor outcomes. Thispaper offers the first study on this topic in the context of Australia, one of the host countries with the largest numberof refugees per capita in the world. Analyzing the Building a New Life in Australia longitudinal survey, the paperexploits the variations in traumatic experiences of refugees interacted with post-resettlement time periods to causallyidentify the impacts of refugee mental health. The findings show that worse mental health, as measured by aone-standard-deviation increase in the Kessler mental health score, reduces the probability of employment by 14.1 percentand labor income by 26.8 percent. There is also evidence of adverse impacts of refugees’ mental illness on their children’s mental health and educational performance. Theseeffects appear to be more pronounced for newly arriving refugees and those without social networks, but they may beameliorated with government support.