This article assesses the welfare effects of granting refugees access to formal labor, based on the case of Syrian refugees in Jordan. Jordan hosts more than half a million registered refugees from Syria, and likely many more who are not registered.
The analysis is based on a survey of 74,277 Syrian refugee households in Jordan, collected by the UN Refugee Agency (UNHCR) and its implementing partners from 2017 to 2019. The data includes detailed information on housing, food security, health, employment, income, expenditure, and socio-demographics. The primary focus of the analysis is the impact of formal labor market integration, operationalized as work permit possession, which is available only for households with persons of working age. Several outcome variables are used, specifically monthly income from work; monthly household expenditure; living below the poverty line; food security; protection needs; and use of child labor.
Main findings:
- Access to formal labor markets significantly improves the welfare of Syrian refugees in Jordan. Refugees with work permits experience higher income and consumption levels, are less likely to live below the poverty line, and have improved food security. Refugees with work permits are less likely to rely on borrowing money or taking food on credit to meet basic needs, indicating a shift towards more stable and secure livelihoods. Additionally, work permits are associated with lower rates of child labor and decreased protection needs.
- The benefits of formalization vary depending on the sex of the household head. Female-headed households experience stronger positive effects on income levels and the risk of poverty compared to male-headed households. However, male-headed households see greater reductions in protection needs. The positive effects of work permits on the likelihood of buying food on credit and on child labor are only evident in male-headed households.
- The positive effects of formalization are stronger for households without professional-level work experience. While refugee households with professional-level work experience benefit from work permits financially, they do not experience the full range of benefits observed for other households. Refugees with professional-level work experience are also less likely to have a work permit, possibly indicating a mismatch between the skills of Syrian refugees and the available formal job opportunities in Jordan.
The authors conclude that work permits considerably improve the welfare of registered urban Syrian refugees in Jordan. This positive impact likely stems from individuals moving into better jobs or experiencing improved conditions in their existing roles. Notably, the benefits of work permits are particularly pronounced for the most vulnerable refugee groups, such as female-headed households and those with non-professional work experience from Syria.