The Psychosocial Value of Employment: Evidence from a Refugee Camp

Reshmaan Hussam, Erin M. Kelley, Gregory Lane, and Fatima Zahra

American Economic Review, Volume 112, Issue 11 (2022), Pages 3694-3724


This paper presents a causal estimate of the psychosocial benefits of employment among Rohingya refugees in Bangladesh. Formal employment in Bangladesh is illegal for Rohingya refugees and restrictions on movement limit their access to informal work in nearby urban centers. Consequently, many refugees remain unoccupied in refugee camps.

The researchers randomly allocated 745 male and female refugees of working age (18-45 years) into three groups: (1) an employment arm, in which participants were offered employment in the form of a surveying assignment for an average of three days per week over 8 weeks, for which they were paid US$1.77 per day (US$5.30 per week); (2) a cash arm in which participants were not offered any work, but were given a large fee (US$5.30 per week) for participating in a weekly survey; and (3) a control arm, in which participants were not offered any work but were given a small fee (US$0.60 per week) for participating in a weekly survey. A comparison of the control and employment arm enabled the researchers to estimate the psychosocial benefits of the employment intervention, while a comparison of the employment and cash treatment arms yielded the nonpecuniary psychosocial value of employment.

Baseline data was collected in November 2019, seven midline surveys were conducted prior to payment disbursal each week, an endline survey was conducted in February 2020, and a final short follow-up survey was conducted six weeks after the interventions concluded.

Main findings:

  • The employment arm generated significant psychosocial and physical benefits relative to the control. There was a significant and meaningful improvement in standardized measures of depression, stress, life satisfaction, self-worth, sociability, locus of control, and sense of stability. Employed individuals were 10 percentage points less likely to be depressed and 5 percentage points less likely to be moderately or severely depressed. Employed individuals were also significantly less likely to feel physically ill, performed better on memory and math tests, and were less risk averse.
  • Employment generated benefits that were significantly greater than from cash alone. The improvement in mental health from employment was four times greater than the improvement in mental health from cash alone.
  • Most refugees in the employment arm were willing to continue working for zero pay, and to forgo a sizable transfer in order to continue working, suggesting individuals can internalize the psychosocial benefits of employment. After eight weeks of working, the majority (69 percent) of participants were willing to work an additional week for zero pay, of whom the majority (77 percent) were willing to forgo an alternative low-effort activity offered by the NGO.
  • Employment significantly increased participants’ perceptions of how valuable they are to their family. Little evidence was found that the social element of the work or the community-centric purpose embedded in the work generated psychosocial value. Neither was there any evidence found that employment altered how participants otherwise spent their day, nor how they consumed earnings, compared to those who only received cash.

Overall, the study provides evidence of a causal effect of employment on psychosocial wellbeing, substantially greater than that of an equivalent amount of cash. The authors conclude that, while cash-based programs directly address the loss of income and are relatively straightforward to implement, they do not address the psychosocial costs that may accompany the absence of work. They suggest that policymakers might therefore favor work programs as a means of alleviating both material and psychological poverty.