Arrested Development: Conflict, Displacement, and Welfare in Iraq

Dhiraj Sharma and Matthew Wai-Poi

World Bank, 2019


In 2014, Iraq suffered two simultaneous crises: an economic crisis driven by a sharp decline in oil prices, and a security crisis caused by the war against the Islamic State. This paper provides the first estimates of monetary poverty and non-income dimensions of wellbeing in Iraq since the 2014 crises based on data from the Survey of Well-Being via Instant, Frequent Tracking (SWIFT) conducted in 2017-18. It also draws on household survey data from before the crises (2012 and 2014) to analyze trends in wellbeing. The authors disaggregate trends by region and household displacement status, and find evidence that:

  • IDPs are significantly poorer than the non-displaced. In both KRG and the North where IDPs constitute a substantial share of the population, displaced households are more than twice as poor as non-displaced households in monetary as well and non-monetary poverty. The causal relationship between poverty and displacement could run in either direction; a poor household might be more likely to be displaced, or a household may fall into poverty because of displacement.
  • The loss of welfare of IDPs is so severe that it drives the overall increase in poverty in Kurdistan and North. IDPs make up about a seventh of the population in the North and Kurdistan, but account for almost a third of the poor.
  • IDPs are not only poorer than non-displaced households, but also more than twice as likely to become or stay poor in the next period (33.6 percent average vulnerability compared to 16.7 percent for non-IDPs).
  • The conflict has wiped out the wealth of IDPs and residents of conflict-affected governorates. IDPs lag non-displaced households in the ownership of non-portable as well as portable assets (cars, motorcycles, vacuum cleaners, televisions, personal computers, iPad/tablets, and mobile phones).
  • IDPs are less likely to be economically active (39 percent labor force participation rate, as a percentage of the working age population) than non-displaced persons (43 percent).
  • The unemployment level of IDPs is substantially higher than that of non-displaced persons (17 percent versus 9 percent).
  • Labor underutilization is particularly severe among internally displaced persons compared to non-displaced workers (24 percent versus 16 percent).

IDPs are poorer and more likely to fall in poverty, which is likely associated with the loss of jobs and livelihoods through displacement. The authors recommend the rapid deployment of the planned public works program, which can provide short-term employment and income to IDPs and other poor families, suggesting that the rehabilitation and restoration of public infrastructure through public works program may also encourage displaced persons to return home, provided the conditions for safe and dignified return are in place.