Relying on demographic and labour surveys which the Palestinian Central Bureau of Statistics collected in 1995, this article investigates the profile of West Bank and Gaza refugees. Refugees are better educated and have higher fertility than non-refugee Palestinians, but the difference is small. However, they have a significantly lower participation rate, a higher unemployment rate and a higher incidence of arrests and work stoppage than the corresponding rates among non-refugee Palestinians. A smaller proportion of Palestinians commute to work into the Israeli labour market and refugees earn lower wages than non-refugees. Returns to investment in education are small for both groups. High fertility among refugees imposes a future challenge for policy makers in terms of resources required for the provision of appropriate education and health facilities. Employing future labour market entrants is another serious policy challenge.