Summary Forced displacement in Colombia has soared due to the escalating internal conflict. The purpose of this paper is twofold: first, to identify adequate instruments for addressing the problem of displacement by estimating its determinants and comparing these findings with the standard migration literature; second, to estimate its welfare losses, thus providing evidence as to whether the response to this problem has been proportional to its size. We find that the welfare losses caused by displacement are 37% of the net present value of rural lifetime aggregate consumption. Our empirical findings also show that a violent environment modifies the net benefits of migration.
