The Economics of Refugee Integration: Turning Displacement into Development

By Simon Dupont Sep. 17, 2025

The global refugee crisis has long been framed as a humanitarian burden—an emergency demanding aid, camps, and containment. Yet this framing overlooks an equally powerful truth: refugees are not only victims of conflict but also potential drivers of economic growth. With more than 114 million people forcibly displaced worldwide as of 2024, according to the UN High Commissioner for Refugees (UNHCR), integrating these populations into host economies is no longer a moral choice alone—it is an economic imperative. When provided access to legal work, education, and finance, refugees contribute to productivity, innovation, and tax revenues at a scale that rivals foreign aid itself. The challenge lies not in the capacity of refugees to integrate, but in the willingness of governments to let them.

From Burden to Dividend

Contrary to populist narratives, refugees are not economic drains. In countries that grant them labor-market access, they often repay the investment many times over. A World Bank study in 2023 found that every dollar spent on refugee inclusion generates up to two dollars in economic returns within five years, largely through increased consumption and local entrepreneurship. Refugees, like any other workers, pay rent, buy food, and create demand in host economies—stimulating growth that extends far beyond aid budgets.

Take Uganda, often cited as the world’s most progressive refugee policy model. The country hosts over 1.6 million refugees, mostly from South Sudan and the Democratic Republic of the Congo, and allows them to work, move freely, and own land. According to the Centre for Global Development, refugees in Uganda contribute an estimated US$1.4 billion to GDP annually—about 2.6 percent of the nation’s total output. Rather than competing with citizens, they fill labor gaps in agriculture and services, creating jobs through complementary demand.

Similarly, a Tent Partnership for Refugees report on Jordan’s labor integration programs revealed that refugees who were given work permits contributed US$250 million in annual income taxes by 2023. Far from burdening public resources, these policies increased national revenue. The data suggests a simple but often ignored equation: exclusion costs, inclusion pays.

Labor Markets: The Untapped Engine

At the heart of the economic potential lies access to work. Yet, over 70 percent of refugees worldwide live in countries that legally restrict their right to employment. This artificial exclusion squanders talent and fuels dependency on humanitarian aid. Refugees spend an average of 17 years in displacement—a generation lost to inactivity.

When barriers are lifted, results are immediate. In Turkey, which hosts the largest refugee population globally at nearly 3.3 million Syrians, formal labor access increased productivity across multiple sectors. The Brookings Institution estimates that integrating just 10 percent of refugees into formal employment could raise Turkey’s GDP by 1.5 percent within a decade. In Germany, where over 900,000 Syrian refugees have been admitted since 2015, the Institute for Employment Research (IAB) reported in 2024 that over 50 percent are now employed or in vocational training, helping offset the country’s aging workforce and declining birth rates.

These outcomes underscore that labor inclusion is not charity—it is demographic pragmatism. Aging industrial economies in Europe and East Asia face acute labor shortages. Refugees can fill essential roles in construction, care work, and manufacturing if properly trained and recognized. The International Labour Organization projects that integrating refugees into formal economies could expand global GDP by US$5 trillion by 2035.

Entrepreneurship and the Refugee Economy

Refugees are disproportionately entrepreneurial. The OECD notes that refugees start businesses at higher rates than native citizens in multiple European countries, despite limited capital and credit access. In Kenya’s Kakuma refugee camp, a microcosm of this resilience, refugees run over 2,000 small businesses generating an estimated US$56 million annually. When financial inclusion policies allow them access to banking and microloans, productivity multiplies.

In the United States, data from the National Bureau of Economic Research shows that refugee-founded firms employ, on average, 1.5 times more workers than native-born counterparts. Examples include companies like Chobani, founded by Kurdish refugee Hamdi Ulukaya, which now employs thousands and contributes hundreds of millions in tax revenue. Such cases reveal that refugees are not merely participants in labor markets—they are job creators.

Financial access is the multiplier. The World Bank’s Global Findex Database (2021) shows that only 14 percent of refugees globally have access to formal financial services. Initiatives like Kenya’s Refugee Affairs Secretariat and Rwanda’s Made in Kigali program demonstrate that when refugees gain credit access, their businesses transition from survivalist to scalable—feeding local supply chains, not just families.

Policy Architecture: Lessons from the Leaders

Countries that have successfully integrated refugees share three policy pillars: legal inclusion, skills investment, and localized economic planning.

Canada’s Private Sponsorship of Refugees Program—launched in 1979 and renewed after the Syrian crisis—allows citizen groups to fund and support refugee families for one year. The result: refugees in Canada have higher employment rates and earnings than other migrant categories within their first decade. The Canadian Department of Immigration reported in 2023 that privately sponsored refugees pay C$100 million more in taxes annually than they receive in benefits.

Meanwhile, Germany’s Integration Courses—offering free language and vocational training—have yielded similar results. Within five years of arrival, refugee employment tripled, contributing to €4.4 billion in new tax revenue.

These successes share a common logic: front-loading integration investment reduces long-term welfare costs. A Migration Policy Institute analysis concluded that each dollar spent on early language and job training saves governments US$1.70 in future social expenditures. Refugees who work are not liabilities—they are taxpayers.

The Political Economy of Fear

Despite clear evidence, refugee integration remains politically divisive. Populist narratives of “job theft” and “welfare abuse” persist, even in economies with record-low unemployment. This rhetoric ignores the empirical record: multiple OECD studies show that refugees’ net fiscal impact turns positive within six to ten years of arrival. Yet political incentives often reward short-term fearmongering over long-term planning.

Media coverage exacerbates the problem. Refugee stories are told through crisis imagery—boats, borders, barbed wire—rarely through data. As UNHCR spokesperson Shabia Mantoo noted, “Public discourse sees refugees as victims or threats, rarely as investors or neighbors.” The result is reactive policymaking that treats migration as a shock rather than a structural force shaping the 21st-century economy.

Reframing Refugees as Assets

The choice before governments is not whether to accept refugees—it is whether to waste their potential. Refugee inclusion is not an act of charity but an investment with measurable returns. Every policy that bars refugees from work, banking, or education is a policy that taxes national growth.

Economic history offers a warning and a promise. The Vietnamese “boat people” admitted to the United States in the late 1970s now have higher median household incomes than native-born Americans. The lesson is simple: when refugees are given a stake in their host country, they strengthen it.

The global refugee crisis will not vanish. But its costs can transform into dividends if nations choose pragmatism over fear. The evidence is overwhelming; the question is political will. The world’s displaced millions do not need pity—they need a paycheck, a permit, and a place to belong.

Works Cited

“Global Trends: Forced Displacement in 2024.” United Nations High Commissioner for Refugees (UNHCR), 2024, https://www.unhcr.org/globaltrends2024.

“Refugee Integration and Economic Impact.” World Bank Development Report, 2023, https://www.worldbank.org/en/topic/forced-displacement.

“Refugees Contributing to Uganda’s Economy.” Centre for Global Development, 2023, https://www.cgdev.org/publication/uganda-refugee-economy.

“Tent Partnership for Refugees: Jordan Labour Market Impact Report.” Tent Partnership for Refugees, 2023, https://www.tent.org/jordan-refugee-workforce.

“Labour Market Integration of Refugees in Germany: 2024 Update.” Institute for Employment Research (IAB), 2024, https://www.iab.de/en/refugee-employment.

“Private Sponsorship of Refugees Program.” Government of Canada – Immigration, Refugees and Citizenship Canada, 2023, https://www.canada.ca/en/immigration-refugees-citizenship/services/refugees.html.

“Forced Displacement and Development.” Migration Policy Institute, 2024,

 https://www.migrationpolicy.org/research/forced-displacement-economics.