The Impact of Forced Displacement on Host Communities: A Review of the Empirical Literature in Economics

Year: 2019 HiCN Working Paper No. 302

The paper reviews 54 empirical studies that estimated the impact of forced displacement on host communities. A review of the empirical models used by these studies and a meta-analysis of 868 separate results collected from these studies are the main contributions of the paper. Coverage extends to 18 major forced displacement crises that occurred between 1922 and 2016, to host countries at different levels of economic development and different types of forced migrants. The focus is on outcomes related to household well-being, prices, employment, and wages. All studies can be classified as ex-post quasi-natural experiments. The analysis on empirical modeling shows a preference for partial equilibrium modeling, differences-in-differences evaluation methods, and cross-section econometrics, with all these choices largely dependent on the type of data available. The meta-analysis on household well-being finds that the probability of a negative and statistically significant outcome for hosts (a decrease in well-being) is below 20%. The probability of finding a decrease in employment or wages for hosts is less than 30%. When this occurs, it is mostly related to female, informal and low-skilled workers. Results on prices show that the probability of finding changes in prices is around 80% equally distributed between increases and decreases in prices with increases mostly associated with food and rental prices. Overall, adverse effects are associated with larger crises and tend to vanish in the long-run.