Integrating refugees: What policies work best?

Editor's note: This episode of VoxDevTalks is available on Spotify and Apple Podcasts.

In this episode of VoxDevTalks, Dany Bahar and Giovanni Peri discuss the evidence on refugees’ economic integration, and which policies help most. In a new review, they assess which approaches have been tried, what works, and where major evidence gaps remain.

The conversation opens with the global trend: refugee numbers have grown sharply over the last two decades. Giovanni notes that “the number of international refugees has increased substantially” and that the world has “gone from 10 million to about 40 million” international refugees since the early 2000s. He adds that internally displaced people now number around 60 million. While refugees are still a minority among all international migrants, their numbers and share are growing.

The drivers are familiar but intensifying: “crisis, conflicts, wars”, Giovanni says, pointing to Afghanistan, Syria, Venezuela, South Sudan, and the war in Ukraine. He also flags that displacement is often intertwined with environmental and climate shocks, suggesting pressures may grow. Bahar adds a key framing for policy: these waves are increasingly persistent.

“We might be in a period where these waves are becoming more permanent or structural.” Bahar

Most refugees do not move from poor countries to rich ones

A major theme is how public debate in rich countries can distort perceptions. The common media narrative is that refugees are assumed to be moving from poor countries to rich ones, fuelling suspicion. Peri is emphatic: “It is not true at all.” Instead, most refugees move to nearby countries, often low- or middle-income states, and typically remain in the region. He highlights examples: many Syrians went to Jordan, Lebanon, and Turkey; Venezuelans largely to Colombia and Peru; and South Sudanese to neighbouring countries.

“About 80% of international refugees are in middle to low income countries, and only 20% of the refugees come to rich countries.” Peri

He adds two important qualifications. First, the share reaching richer countries has increased recently, with the Ukrainian crisis sending many people to European countries such as Poland and Germany. Second, the evidence base is skewed: research and debate on integration is much richer in high-income settings, meaning we often know far more about outcomes in places like Denmark than in the lower-income countries hosting the majority.

Refugees’ circumstances differ sharply across host countries

The speakers stress that ‘refugee’ is not a single experience, and policy needs to reflect context. Peri outlines several differences between refugees in high-income and low-income countries. In poorer settings, many refugees spend long periods in camps, and international organisations can be crucial in providing support as host states face serious economic strain. In richer countries, refugees are more likely to be resettled more quickly, dispersed across towns and cities, and supported by local government and civil society.

Selection also matters. Bahar explains the basic economic logic: “the cost of migrating is going to be higher the farther away you are going”, so those who reach wealthier countries often have more resources, stronger networks, or higher education. That affects policy design because integration barriers and potential labour market trajectories may differ. Bahar illustrates this with Venezuelan migration: those in Colombia differed, on average, from those who made it further to Chile or the US.

The short-term costs are real, but long-term gains are possible

Peri acknowledges that costs for host countries are often front-loaded: people need shelter, accommodation, and time to navigate legal status and job entry. Large, sudden inflows can intensify the sense of strain – he cites Syrians arriving in Germany around 2015–16, Venezuelans in Colombia, and Ukrainians in Poland.

But Peri argues that focusing only on initial costs misses the dynamic benefits when integration works. Refugees can become workers and entrepreneurs, and their children often integrate into society. The key claim is that, over time, refugees can shift “from a potential cost to an asset for the economy”.

“Their economic integration is crucial to how much they become an asset.” Peri

Early access to work is crucial for long-run integration

One of the clearest findings discussed concerns labour market restrictions. In many countries, asylum seekers or people on temporary protection face delays or bans on working. Peri says the evidence consistently shows the longer refugees are kept out of the labour market, the slower and weaker their long-term integration will be, even years after the ban ends. He explains that delayed access creates uncertainty, discourages employers from hiring, and reduces incentives for both employers and refugees to invest in language or country-specific skills. He also emphasises the human impact: restrictions can harm mental health and wellbeing because refugees “want to work” and feel more valued when they can contribute.

What works best: Language, matching, cash, and smart placement

The episode highlights several policy areas with strong evidence.

Language training emerges as one of the most cost-effective tools.

“Language classes are one of the most cost-effective policies to integrate refugees.” Peri

Language skills help people access information, build social connection, and move into better-paid jobs with more communication content, not only manual roles. Even modest language progress can unlock job “upgrade” pathways and more stable employment.

Job matching and employer connections are framed as solutions to market failures. Bahar argues that refugees face intensified “information asymmetries” and “matching frictions” – not knowing how to search, lacking networks, and struggling to present their skills in the local labour market. He underlines that integration support isn’t charity but efficiency: addressing these frictions can be “a really win-win for all”, improving outcomes for refugees and employers.

Location and mobility also matter. Refugees may be stuck in places without strong job growth, particularly if they are confined to camps or lack the cash to relocate. Bahar notes that even “a couple $100” could be a decisive barrier for someone who is liquidity constrained. He suggests that dispersal policies can work better when linked to labour demand, and argues that new data tools could help match refugees’ skills to areas where those skills are needed.

Sequencing and bundling is another focus. Peri argues intervention should start early, not after long waiting periods. A practical sequence is to begin with general skills (language and basic civic knowledge), then move to more specific labour market help, such as job search support or targeted training. He also stresses the enabling role of cash support in the initial period so refugees can invest in skills rather than “scrambling to just break even”. Bahar adds the real-world constraint for policymakers: scale. Some high-touch interventions (like one-to-one mentoring) may be effective but hard to deliver at large scale during major inflows.

Evidence gaps, private sponsorship, and the politics of integration

The conversation returns to what remains uncertain, especially in lower-income host countries where data is harder to collect, and labour markets are often highly informal. Bahar cautions that it may be unrealistic to expect refugees to outperform the average worker if the broader economy is constrained by informality and weak institutions.

They also discuss who delivers support. Peri says research is still limited, but early evidence suggests privately sponsored refugees can do well in language acquisition and labour market entry. Bahar points to a possible “side effect” of private sponsorship: sponsors may concentrate in areas with stronger economies and provide mentoring and connections, potentially solving multiple constraints at once.

Peri agrees that decisions ultimately depend on political willingness, but argues there are simple, high-return messages: language classes pay back quickly, and blocking access to work is economically harmful. He also suggests employers may become key allies as many rich countries face severe labour shortages.

Bahar points to a broader economic reality: advanced economies are grappling with “a lot of jobs, but no people”, even as many developing countries struggle with “a lot of people, but no jobs”. He argues migration is a practical tool to address these imbalances, and offers Latin America’s response to Venezuelan displacement as an example of political leadership shaped by evidence. As labour shortages intensify, richer countries may better recognise that integration is not only a moral question, but also – as Bahar puts it – “our own self-interest”.

Reference

Bahar, D, R Brough, and G Peri (forthcoming), "Refugees’ economic integration," Journal of Economic Literature.