From trauma to resilience: The effect of stress on the labor market outcome of refugees

Abstract

Millions of refugees struggle to survive in foreign countries. They have a high prevalence of stress-related mental health problems which lead to a growing concern about their labor market outcome. This study develops a stress and coping model of refugees that includes two stressors. The stress triggered by traumatic events may be eased gradually over time by coping, while the one triggered by workplace discrimination persists throughout their working life. Since coping takes time, refugees must carefully manage their time among coping, leisure, and working. We find that refugees choose to ease more stress but earn less in the early stage of their working life. After refugees reduce stress gradually over time, they transform their working life from barely surviving to striving. We also find that emotional outbursts release stress and increase income in the short term but not necessarily in the long term. Refugees prefer avoiding intentional outbursts that would do more harm than good.