Periodic Reporting for period 2 - REFUGEDEV (REFUGEES, POVERTY AND ECONOMIC GROWTH) Reporting period: 2020-07-01 to 2021-12-31 Summary of the context and overall objectives of the project According to the UN Refugee Agency (UNHCR), the number of people forcibly displaced is now at an all-time high of 82.4 million, compared to 37.5 million in 2010. Globally, nearly one in every 100 humans is now either a refugee or internally displaced, with one person becoming displaced every three seconds. What is perhaps less visible from the media headlines is that over 85% of the refugee population is concentrated in the developing world, 60% of which are in fragile states. In fact, the 36 most fragile countries in the world account for 2.6% of global GDP but host 71% of the world’s population of forcibly displaced people.The number of forcibly displaced individuals seeking refuge in the developing world is only expected to increase with worsening conflict in several countries, particularly in Sub-Saharan Africa. The World Bank estimates that by 2030, the share of the global poor living in fragile and conflict-affected situations is likely to reach 46%.These trends pose dramatic and immediate economic challenges to low-income, fragile states in the developing world, while increasing the threat of economic and political instability in the developed world due to growing immigration and demand for asylum. Recent events have showcased how managing refugee flows may be a defining challenge of our time.UNHCR currently identifies four types of conflict-induced displacement: individuals can be internally displaced within the borders of their country; they can be integrated into a neighboring country of first asylum; they can be resettled into a third country (usually in the developed world). Once conflict subsides, forcibly displaced individuals may be repatriated to their country of origin. The lack of socioeconomic integration of refugees into their host communities in the short, medium and long-run, in any of these scenarios, lies at the crux of the current worldwide refugee crisis. And yet, solutions to this problem have remained fairly unexplored in economics. The economic integration of refugees into the developing world should be understood in the broader context of the far-reaching impact that large inflows of forcibly displaced individuals escaping conflict can have on fragile host economies. IDPs or refugees can represent substitute or complementary labor to that of host communities, leading to labor market effects that can affect employment outcomes of refugees and hosts, their occupational distribution and their wages. Inflows of IDPs or refugees can also increase product demand, which can affect prices and consumption patterns in host economies or they can alter political equilibria, strain state capacity and compromise public service delivery. Moreover, the arrival of refugees with diverse ethnic and religious backgrounds, often scarred by conflict, can have long-lasting effects on economic interactions and social cohesion. These challenges are aggravated by the shared concern among governments of host countries that providing support for refugee integration can attract further waves of refugees and economic migrants.The type of displacement trajectory can also matter. For one, while refugee camps can provide refuge during periods of conflict, an important question that arises is whether the experience of living in a refugee camp can significantly alter the economic, political and social behaviour of refugees, and whether these effects persist once they return to their countries of origin, shaping its political and economic recovery in the aftermath of conflict.While the challenge of integrating displaced individuals into host communities is multifaceted, at its core lie several key themes in development economics related to how labor markets function in the developing world and to how individuals with different backgrounds and experiences can socially integrate. Progress on understanding these issues has, however, remained elusive due to a severe dearth of data on refugees, IDPs and their families, and due to formidable empirical challenges associated with isolating the impact of forced displacement on the socioeconomic outcomes of those displaced and of host communities. REFUGEDEV focusses on three central themes: i) quantifying the short and medium-run drivers of the economic and social integration of refugees and IDPs into host communities in the developing world, ii) the medium-run implications of the economic integration of refugees on attracting additional waves of refugees, and iii) how forced displacement affects medium to long-term investments in schooling and employment outcomes of displaced individuals. Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far To understand the short and medium-run drivers of the integration of refugees into host communities, REFUGEDEV co-designed and co-implemented an experiment with UNHCR that provides cash transfers and employment support to a randomly selected subset of refugees and ultra-poor host community members living in an open refugee camp in Northern Mozambique. This is a unique setting to obtain causal estimates on how providing cash transfers and employment support can shape how refugees and host community members interact and whether these interactions facilitate economic integration and social cohesion. The baseline survey data for this part of the project has already been collected and the midline survey data collection is being finalized. The baseline data has already enabled the research team to identify some key findings: refugees experience slightly higher standards of living relative to ultra-poor host communities neighboring the refugee camp but they also report lower levels of mental health and limited social interactions with locals. Further endline surveys will be collected by the end of 2021 and in early 2022 to examine the medium-term impact of the support packages provided to refugees and host community members and how they help shape economic and social interactions between refugees and host community members. To understand the medium-term dynamic effects of labor market integration REFUGEDEV leverages the same experimental design to examine how the economic integration of refugees into a location can attract additional waves of refugees (or economic migrants), up to three years following the intervention. This is an exceptional setting to monitor dynamic refugee and migrant movements in response to changes in the employment and income status of networks of refugees already established in host communities.To understand the long-term impact of forced displacement REFUGEDEV focusses on a natural experiment – the protracted civil war in Mozambique (1977-1992) -, which provides variation in exposure to different conflict-induced displacement trajectories for siblings belonging to the same family. During the chaos of war, large families would often get separated with siblings, who would otherwise have lived similar lives, experiencing different displacement trajectories: some became refugees in camps in neighboring countries, others were displaced into Mozambican cities, others were displaced into rural areas while others remained in their places of birth. I analyse the first post-war Census in Mozambique to compare how these different displacement trajectories translated into different levels of schooling during conflict and different employment outcomes once the war was over. I further conducted a survey today of individuals displaced during the war to document the long-run effects of displacement on wages, social norms and mental health. This subproject of REFUGEDEV is now close to completion. I find that investments in schooling increased substantially for those who were internally displaced into cities relative to siblings who stayed in rural areas or siblings who were displaced into refugee camps. Displacement, and in particular, increases in schooling, are also associated with occupational shifts out of agriculture.I further find that while those displaced into the city share similar levels of education and similar social norms, there are substantial medium-term downsides to forced displacement, even when civilians move to presumably better socioeconomic environments in the cities. Survey respondents report lower wages, lower levels of trust and lower levels of mental health. Overall, these findings document how forced displacement can represent an important mobility shock that triggers higher investments in education and significant occupational shifts, which, in the aggregate, can lead to the structural transformation of the economy following extended periods of conflict. Moreover, this work can inform the design of improved strategies to better manage and leverage displacement flows during episodes of conflict, refocusing attention and resources on how to best channel displaced individuals into urban environments with more economic opportunities and away from the refugee camp model. However, our findings also suggest that forced displacement can have hidden costs that can still lower long-term earnings and negatively impact long-term socioeconomic outcomes through its impact on mental health. Strategies that attempt to address mental health concerns can be developed alongside policies to facilitate the integration of IDPs into urban host communities. Combined, these strategies may leverage forced displacement as an opportunity for lasting economic development and growth. Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far) REFUGEDEV aims to contribute to an academic, policy and humanitarian debate on the short, medium and long-run socioeconomic impact of forced displacement in the developing world, and to help identify potential support strategies implemented by governments and international organizations to facilitate the economic and social integration of displaced individuals into host communities. This can be achieved through a combination of state of the art statistical techniques and unique and varied sources of data ranging from restricted-access micro census data, administrative data from UNHCR, UN archival data and novel survey data. REFUGEDEV is also engaging in a multi-pronged dissemination strategy to ensure that its core findings contribute to policy and scholarship on forced displacement. This strategy includes the publication of journal articles in Economics and related fields; frequent seminar and workshop presentations in both academic and policy venues; regular policy briefs for policy dissemination; a final conference to be organized at the London School of Economics to discuss frontier research and policy experimentation on forced displacement in the global South and film documentaries to reach a wider general audience, a policy audience and an academic audience (namely for teaching purposes). Refugee Camp Aerial Camp Sign
