Conflict displacement and labour market outcomes: Evidence from post-war Bosnia & Herzegovina∗

This study uses a longitudinal data source to study the effects of conflict-induced displacement on labour market outcomes for Bosnians in post-war Bosnia and Herzegovina. To account for endogeneity in the displacement status, I exploit the fact that the level of violence in the pre-war residence likely affected individual displacement status for Bosnians and yet is not associated to economic performance. Within the Bosnian displaced population, I find evidence of positive selection into displacement. With regard to the effects of displacement, and despite significant assimilation into the labour market over time, my results show that displaced Bosnians are less likely to be in work. I find no additional effect of education on labour market outcomes for the displaced. Although high levels of informality are likely to contribute to the negative effect of displacement, significant differences along gender lines suggest that cultural and sociological factors also play an important role in intra-household allocations.