This study investigates the effects of displacement on the socio-economic status of second-generation Palestinian internally displaced persons (IDPs) in Israel. The results show that members of this group do not differ from non-displaced Palestinians in their educational or occupational attainment, but that displaced households experience higher rates of poverty and poorer housing conditions than non-displaced households. I find that the relationship between displacement and the prime indicators of social mobility-education and jobs-was weakened by three factors: extreme spatial segregation between Palestinians and Jews, the concentration of disadvantage among Palestinian IDPs within the host communities, which were Palestinian spaces, and a high level of dependence on resources concentrated in Jewish spaces among all Palestinians, not just IDPs. These three conditions, however, do not eliminate gaps in assets and land ownership between IDPs and non-displaced Palestinians, which, I argue, contribute to higher poverty rates among displaced households.