The labor market reintegration of returned refugees in Afghanistan

Craig Loschmann and Katrin Marchand

Small Business Economics, Volume 56 (2021), Pages 1033–1045


This paper investigates the labor market outcomes of returned refugees in Afghanistan. The authors examine the factors influencing the labor market outcomes of returned refugees compared to non-migrants, and in particular, whether the returnees’ migration and return experience influences their labor market outcomes. The authors focus on the likelihood of that an individual is engaged in one of three labor market activities: self-employment in business; agriculture which incorporates subsistence farming and/or animal herding; and wage employment.

The analysis relies on cross-sectional data from an original household survey collected in five provinces of Afghanistan in 2011 covering 1,841 individuals, of which 461 are returned refugees from Iran or Pakistan. The sample is restricted to returnees who originally migrated because of political or security concerns or because of an environmental disaster, and who stated their return was motivated by improvements to the political and security situation of the country or personal reasons (e.g. missed their country, culture, or family). By excluding voluntary migrants and those returnees motivated by employment opportunities, the estimates are less affected by selection bias than would otherwise be the case. The authors control for ethnicity (Pashtun, Tajik, other) of the returnee as well as the district type (urban, semirural, or rural) and province of return.

Descriptive statistics:

  • Returnees are about 6 percentage points more likely to be self-employed in business, while non-migrants are around 5 percentage points more likely to be wage employed. There is no statistical difference in the likelihood of not working or being engaged in an agricultural activity between the two groups.
  • Nearly all returned refugees are the household head, compared with around half of non-migrants. On average, returnees are eight years older than non-migrants. Returnees are more likely to be married and have more children compared to non-migrants.
  • Around 15 percent of returnees have a secondary or higher level of education compared to 11 percent of non-migrants.
  • There is no discernable difference in the socioeconomic status of returnees and non-migrants in terms of land ownership.
  • Returnees are 12 percentage points more likely to have social capital in the form of a local social network (involvement in a community organization other than a religious group).
  • A quarter of returnees were employed prior to seeking asylum abroad and just over two-thirds fled to Pakistan, while the rest fled to Iran. The average time abroad is around 12 years, and only 6 percent sent remittances during that period.
  • Around half of the returnees repatriated between the fall of the Najibullah regime in 1992 and the ouster of the Taliban regime in 2001, and around half repatriated in the period from 2002 to 2011; on average they had returned 10 years prior to the survey. Nearly three-quarters of returnees cited improvements in the political and/or security situation as the main reason for return, while the rest reported personal reasons (i.e. wanting to be closer to family and friends).
  • The average savings brought back upon return was US$246, and 28 percent received financial assistance on return from either an international organization or government. Only 19 percent of returnees intend to migrate in the future.

Main results of the empirical analysis:

  • Returned refugees are less likely to be engaged in wage employment compared to non-migrants. Returned refugees are less than half (0.42 times) as likely to be engaged in wage employed compared to non-migrants.
  • Educational attainment affects labor market outcomes of non-migrants but is not statistically important for the labor market outcomes of returned refugees. Non-migrants with a higher level of educational attainment (at least secondary education) are less likely to be engaged in agricultural work and more likely to be involved in wage labor—suggesting that non-migrants with low levels of education have few options other than subsistence agricultural labor, whereas higher levels of education open up opportunities for wage employment. For returned refugees, however, there is no significant relationship between educational attainment and the likelihood of wage employment.
  • Differences in labor market outcomes arise from dissimilarities in socioeconomic status. Both non-migrants and returned refugees belonging to households that own land have a higher likelihood of being engaged in an agricultural activity relative to not working.
  • The strength of social networks affects employment status for both non-migrants and returned refugees. Being involved in a community organization improved the engagement of both non-migrants and returned refugees in all labor market activities.
  • Several factors are found to be of particular consequence for current employment status of returned refugees including employment prior to migration, time abroad, amount of savings brought back upon return, return assistance, and intentions to re-migrate. Being employed prior to migrating increases the likelihood of being wage employed upon return. The more years spent abroad, the greater the likelihood of being wage employed, suggesting skill acquisition while abroad. Returnees who sought asylum in Iran are more likely to be involved in farming or herding upon return compared to those who sought asylum in Pakistan. The amount of savings brought back upon return is positively associated with becoming self-employed in agriculture or herding. Receiving assistance upon return or having intentions to ‘re-migrate’ is negatively associated with becoming self-employed in agriculture or herding. The authors suggest that labor-intensive activities such as farming or herding animals may necessitate high upfront investment in productive assets like land and livestock not covered by the support received and which makes future movement less desirable.

The authors conclude that, in a context where wage employment is limited, self-employment may be the only, if not best viable income-generating activity. Providing support to returned refugees for this specific purpose, whether for a business venture or agricultural endeavor, has the potential to facilitate reintegration and improve individual welfare, while also contributing to local development.