World Bank Study Reveals Why Forced Displacement Harms Children Beyond Poverty Alone

A World Bank-led study finds that forced displacement causes lasting cognitive, physical and mental health challenges for children that cannot be explained by poverty alone, highlighting the need for targeted rather than one-size-fits-all policies. The research urges governments, development partners and the private sector to invest in legal integration, education, nutrition and mental health support to protect displaced children and strengthen long-term human capital and economic resilience.

Forced displacement is often treated as a humanitarian emergency that requires food, shelter and financial assistance. However, a new study by the World Bank Development Research Group, University of California, Davis, and Universidad de los Andes suggests that governments need to rethink this approach. Based on original data from 1,579 children across 1,370 households in Medellín, Colombia, the research finds that displacement leaves lasting cognitive, physical and mental health effects that cannot be explained by poverty alone. Comparing Venezuelan refugee children, Colombian internally displaced children (IDPs), and non-displaced Colombian children, the study concludes that different forms of displacement require different policy responses if countries want to protect future human capital and long-term economic growth.

Different Crises Leave Different Scars on Children

The findings show that the reason children are displaced plays a major role in determining how they develop. Venezuelan refugee children, who fled economic collapse, shortages of food and failing public services, experienced the greatest setbacks in cognitive development and physical health. Even after accounting for household wealth and parental education, they remained 0.34 standard deviations behind non-displaced children in cognitive development and 0.50 standard deviations behind in age-standardised Body Mass Index (BMI). In wealth-based comparisons, refugee children ranked 18 percentile points lower in cognitive development and 13 percentile points lower in physical development than children from equally wealthy non-displaced households.

The picture was very different for Colombian children displaced by armed conflict. Their biggest challenges were psychological rather than physical. Even after adjusting for household wealth, depression levels remained 0.25 standard deviations worse than among non-displaced children, while trauma and socioemotional difficulties also persisted. The study found that these mental health challenges affected not only children who directly experienced displacement but also many born after their families had already been displaced, suggesting that the effects of conflict can continue across generations.

These findings show that displacement creates challenges beyond financial hardship. Refugee children primarily need better nutrition, healthcare and education, while conflict-displaced children require sustained mental health and psychosocial support.

Why Poverty Reduction Alone Will Not Be Enough

One of the study's most important conclusions is that increasing household income alone will not solve these developmental problems. Researchers controlled for household wealth, parental education and even grandparental education, yet many developmental gaps remained significant.

For refugee children, better household wealth reduced some cognitive disadvantages but had little effect on physical health outcomes. For internally displaced children, increased household wealth did almost nothing to reduce depression, trauma or socioemotional problems. This means governments cannot assume that general poverty reduction programmes will automatically eliminate the long-term effects of forced displacement.

For policymakers, this is an important message. Countries should stop treating all displaced populations as a single vulnerable group. Refugees displaced by humanitarian crises require policies focused on nutrition, school continuity and healthcare, while conflict-displaced children need specialised trauma recovery and mental health services. Designing social protection programmes without recognising these differences could reduce the effectiveness of public spending.

Legal Status Can Improve Development Outcomes

The research also highlights the importance of legal integration. Colombia has implemented one of the world's largest refugee regularisation programmes, granting legal status to more than 1.8 million Venezuelans. This has improved access to education, healthcare, formal employment and social protection.

Children whose families obtained legal status consistently performed better than undocumented refugee children. Undocumented refugee children scored 0.77 standard deviations below non-displaced children in cognitive development, compared with 0.24 standard deviations among regularised refugees. Similar improvements were found in physical health. School enrolment, health insurance and registration in Colombia's SISBEN social protection system were all linked to smaller developmental gaps.

However, the research also shows that legal documentation alone is not enough. Even regularised refugee children continued to perform below non-displaced children, indicating that governments need to combine legal status with long-term investments in education, nutrition, healthcare and child development programmes.

A Roadmap for Governments, Development Partners and Business

The study offers valuable lessons for countries facing rising displacement due to conflict, economic crises, or climate change. With more than 123 million forcibly displaced people worldwide in 2025, including children who account for nearly 45% of the displaced population, protecting child development has become both a humanitarian and economic priority.

For governments, the findings suggest that displacement policies should move beyond emergency relief and focus on building long-term human capital. National development strategies should integrate education, nutrition, mental health, and healthcare into refugee and displacement programmes, and use child development indicators alongside traditional poverty measures to evaluate success.

For international development partners, including multilateral development banks, UN agencies and bilateral donors, the study highlights the need to shift funding towards integrated child development programmes rather than relying primarily on short-term humanitarian assistance. Supporting education, nutrition, psychosocial care and legal integration together could generate stronger long-term economic and social returns.

The private sector also has an important role. Companies in healthcare, education technology, nutrition, insurance, financial services and digital identity can partner with governments to improve service delivery for displaced populations. Businesses that invest in workforce development and child well-being can contribute to stronger future labour markets while supporting environmental, social and governance (ESG) objectives. At the same time, failure to address developmental gaps could reduce future workforce productivity, increase inequality and slow economic growth.

Although the researchers note that the study identifies strong associations rather than direct causation, the policy message is clear: forced displacement is no longer just a humanitarian issue. It is a long-term development challenge that will shape future education outcomes, labour markets, public health and economic resilience. Countries that invest early in targeted support for displaced children are likely to build stronger, healthier and more productive societies over the coming decades.