5 were confined to Jordan unlike the _Marielitos_ , many of whom eventually left Miami (Peri and Yasenov 2017).

Fourth, Kuwaiti economic institutions were of lower quality than Jordan’s in 1990, so the KuwaitiPalestinians were not going to bring experience of superior economic institutions with them (Gwartney, Lawson, and Hall 2017). Kuwait had the 70th-freest economy in the world in 1990 compared to Jordan’s rank of 54.

Fifth, the substantial population of Palestinians already living in Jordan strengthens the case that this is an exogenous shock that would quickly impact Jordanian institutions. The Kuwaiti-Palestinian refugees faced lower transaction costs to enter established political and economic networks occupied by their coethnics. Instead of spending time learning about local politics, the Kuwaiti-Palestinians had an immediate impact on Jordan’s economic institutions facilitated by networks of their longer-settled co-ethnics (van Hear 1998). This is similar to how the large population of Cubans living in Florida in 1980 helped facilitate the rapid labor market integration of _Marielitos_ . Refugee surges tend to upset ethnic balances and produce governing tensions and sometimes civil war, especially when the refugees possess ethnic ties with large groups in the host country (Buhaug and Gleditsch 2008; Salehyan and Gleditsch 2006). The surge’s upsetting of ethnic balances and the governing coalition explain Jordan’s subsequent economic reforms.

The last and best feature of this sudden natural experiment is that the Kuwaiti-Palestinians had full legal, political, and economic rights immediately upon entering Jordan, a situation unique in the Arab world (Zureik 1994).

Three features of this exogenous shock make it less useful as a natural experiment. The first is that the Kuwaiti-Palestinians were overwhelmingly Sunni Muslims, just like Jordan’s population. The second is that Jordan did not have a democracy like other nations that accepted large numbers of immigrants. Jordanians voted in the 1989 elections and expected future elections, but their impact on policy through voting was limited. Third, Jordan did not have a welfare state as large as those in the developed world (Brynen 1992).

# **4. Data**

This study uses Gwartney, Lawson, and Hall (2017) Economic Freedom of the World Annual Report (EFW) to measure changes in Jordan’s economic institutions. The EFW index is a reasonable proxy for economic institutions, incorporating 42 variables collected from numerous sources (including the World Bank and IMF) across five categories including the size of government, legal structure and property rights, access to sound money, freedom to trade internationally, and regulation of credit, labor, and business (Powell, Clark, and Nowrasteh 2017; Feldmann 2017). The EFW index ranges from 0 to 10, in which a higher score denotes a greater level of economic freedom. Polity IV is used as a measure of democratic political institutions (Center for Systemic Peace 2018). The Polity IV index measures how democratic a country’s political institutions are on a scale of –10 to +10, in which a higher score denotes a more democratic government.

Political liberalization in Jordan in 1989 was not a permanent transition toward democracy and it occurred before the refugees arrived (Sütalan 2006). In contrast, the economic institutions did change permanently and rapidly after the surge of Kuwaiti-Palestinians. The study relies on the EFW index as the outcome of interest as it represents economic reforms (Sütalan 2006). EFW scores were originally calculated in five-year intervals with most countries’ series of scores beginning in 1975, and on an annual basis following 2000. The uneven spacing of EFW time series and relatively short time series of observed EFW scores prior the Jordanian refugee surge in 1990 are two potential problems. The study therefore conducts multiple specification checks that probe the sensitivity of the results to avoid overstating the precision of our findings.