The Jordan Compact

In Simple Words

Think of a host country as a gated office building that refuses to give temporary security badges to visiting workers, keeping them stuck in the waiting room. A compact acts as a bilateral trade agreement: foreign partners unlock special export deals and financial loans for the building owner in exchange for granting security badges (work permits) to the visitors, allowing them to legally enter offices, earn wages, and contribute to the building's maintenance.

Research question

Refugees in host nations are frequently restricted to humanitarian camp aid and barred from legal labor markets, leading to severe economic dependency and systemic poverty. Host countries face high administrative and fiscal burdens when integrating large displaced populations without foreign investment or trade incentives.

Participants

Syrian refugees (~660,000 registered in Jordan, ~1.3 million overall) and local Jordanian jobseekers in Amman, Irbid, and Mafraq.

Study Design

Policy framework analysis combined with field survey evaluations tracking labor market access following bilateral trade and loan commitments ($2.1B in direct grants, $1.9B in loans).

Results

Pledged 200,000 work permits for Syrian refugees in agriculture, construction, and manufacturing by relaxing administrative barriers and trade rules of origin. However, 93% of urban refugees initially remained below the national poverty line ($5/day), and control group employment rates remained low at 2.7% for Syrians and 6.8% for Jordanians.

Takeaway

Negotiate international compacts that combine trade concessions and concessional financing for host nations with formal commitments to grant work permits and reduce regulatory labor barriers for displaced populations.

Related findings

• Ability-Dependent Peer Screening →Labour & employment

  Imagine trying to pick the best chess player out of a crowd. Only a master chess player has the expertise to accurately assess who among their acquaintances truly plays at an elite level, whereas a beginner cannot distinguish between a decent amateur and a grandmaster.

• Ability-Heterogeneous Wage Returns →Labour & employment

  Imagine a nightclub with a strict dress code based on exam scores where high scorers enter easily without extra effort. For high-scoring individuals, additional work experience adds little value because employers already hire them based on test scores.

• Activation Program Threat Effect →Labour & employment

  Think of a mandatory weekend study hall for students behind on homework. Many students work much harder during the week to finish their assignments on time simply to avoid having to show up for the study hall in the first place.

• Actual vs. Potential Experience Bias →Labour & employment

  Calculating how many years someone has been a driver by subtracting their high school graduation year from their current age creates significant error if they spent five years without a car. Taking a simple formula creates a false picture of driving practice.