Maximising employment opportunities for refugees

The initial place to which refugees resettle really matters for their economic outcomes and, most extraordinarily, that of their children

Alex Teytelboym

Associate Professor of Economics

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Alex Teytelboym

Associate Professor of Economics

01 Sept 2025

Key Points

The community in which a refugee is resettled has a dramatic effect on their well-being and success moving forward.
Employment optimisation systems and resettlement schemes should consider a refugee’s preferences. They should not only optimise employment but how well an individual matches a given community.
Economists and market designers can offer interventions to improve resettlement schemes, but they must be aware of political pressures and similar constraints.

Location matters

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One of the remarkable things I realised when I started working on refugee issues as an economist is how much it matters where refugees start their life in a new host country. This was a real surprise to me.

At first I thought, this is quite extraordinary. If I were to help refugees resettle to New York, they’re entirely free to get up and move to Ohio if they wish. And if I resettle them in London, they could move to Birmingham and vice versa. Yet, there was overwhelming evidence that the initial place to which refugees resettled really matters for their economic outcomes and, most extraordinarily, that of their children.

We found that if a refugee is resettled to an area that poorly matches their skills, there can be a real impact. If they are unable to find a job, then not only do they suffer economically over their lifetime but so do their children and even their grandchildren.

“Matchmaking”

This observation struck me as an incredible opportunity to help. Scholars found that it wasn’t the case that some areas were just bad at getting refugees jobs. Instead, they found that a match between refugees and the local area’s characteristics mattered. Some areas were perfect for some kinds of refugees, and other places were suitable for others.

Eventually, I started working with an NGO in the US called HIAS, formerly the Hebrew Immigrant Aid Society. One hundred and twenty years ago, they helped resettle Jews from Eastern Europe to the United States. Now they help people from all over the world resettle as refugees in the United States.

HIAS was keen to understand what makes refugees succeed in different areas around the United States. Towards this end, my colleagues and I looked at HIAS’ data over the last decade to understand where these successes occur – what kinds of refugees do better and worse in different types of areas.

Employment optimisation

We developed software for HIAS that improves how they allocate refugees to different areas. We aim to maximise the chances of employment for the refugees that HIAS helps resettle. At the same time, we pay close attention to the different services that local areas provide to refugees.

For instance, refugees often arrive under special circumstances. Some have medical conditions, while others are single parents of large families. These individuals need particular kinds of support. As such, we pay close attention to the ability of local areas to provide the help they need. These considerations are crucial because local areas resettle refugees voluntarily, and they are under no obligation to do so.

That said, at times, we have experienced resistance to implementing an employment optimisation system for refugees. Of course, this is very strange. After all, we’re helping refugees do much better in their employment outcomes. Why wouldn’t every resettlement agency around the world adopt a system like this?

Resistance to change

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I think there is a concern that we do not always fully satisfy the needs of refugees. For example, in the United States, the system we’ve created focuses specifically on maximising employment outcomes. Of course, employment is only part of life for any family. Other essential aspects are education, quality of medical care and so on. Applying these different criteria, priorities and preferences can be very difficult.

There is this resistance towards introducing improvements for fear they won’t be completely perfect. This is a great shame because many resettlement systems around the world could be remarkably more efficient and equitable than they are currently. Yet, we don’t find politicians and others rushing to adopt changes.

Moreover, I think another reason is that politicians worldwide don’t want to be perceived as friendly towards refugees. Unfortunately, such resistance is tough for a humble economist to counter.

Protecting preferences

The impact of our software is straightforward to measure. Moreover, we’ve been able to increase the employment rate of refugees in the US from about 30 to about 40%. This is a considerable increase, given we had no additional resources. We simply found the best possible matches between refugees and local communities. This is only scratching the surface of how a humane, refugee-focused and community-driven system can work.

Notably, however, we have designed our system’s objective, although we are not refugees ourselves. The situation begs the question: what is the correct objective of an allocation? We don’t really know the answer to this, so we shouldn’t impose our objectives on the refugees. By using an objective, we are projecting our preferences onto the refugees.

I believe this is a mistake. We don’t treat the refugees being resettled to our country as we do our citizens. After all, our citizens are given choices in every sphere of life. Yet, refugees, who are on a path to becoming citizens, are denied choices as basic as where they will live. Not affording individuals this right seems like an extraordinary thing. Not only does it have ethical implications, but it’s also a massive waste of economic resources.

Can economists help?

Economists need to be very humble about their contribution to a market design solution. Often, I think economists are very keen to intervene. Regardless, advice from economists can be very technocratic. It can often be detached from the people that they’re trying to help.

Economists need to be very involved with the markets that they design. Sure enough, they usually are. In fact, most market designers become deeply embedded inside a marketplace they’re helping to reengineer.

As such, economists are typically quite responsive to what occurs in a marketplace. They understand the limitations of stringent rules and realise that efficiency is not necessarily the most essential feature. With some humility of how the marketplace works, they can often use their tools creatively to help market participants.

Challenges with resettlement

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Refugee resettlement is a delicate and ethically challenging issue. Economists aiming to help must be responsive to the needs of both refugees and local communities. They must also be aware of the broad context in which resettlement schemes operate.

Moreover, resettlement systems are embedded in a complex network of political actors. These politicians must bargain and negotiate to ensure the resettlement process continues. Economists must be aware of this and the challenges that the political process creates.

Overall, economists should avoid being detached technocrats but should instead make small interventions to improve the situation. Therefore, I think economists who work in market design must also become embedded in the systems. This can be difficult because, of course, one must also be sure to remain impartial. Nevertheless, without having a stake in the marketplace that you are helping to design, I think it is impossible to help its participants.