The Palestinians are tarbabies. Very few of them were actually displaced by the creation of Israel, yet they've become the descendants of what really is a political and ethnic crusade. Most Palestinians never lived in Israel and have no real claim to be called refugees.
They are born into a culture which has a chip on its shoulder, to put it mildly. It makes them wholly unfit to try to improve their circumstances. Instead, everything can be explained in their lives as being the fault of the Jews.
I can't blame the other arab countries for not taking them in. What's in it for them? Additionally, it's not as if the Palestinians don't have a place to live. They're living there right now. The "refugee camps" are not tents in a compound. They are cities. What an abuse of the term.
In addition, the Palestinians are not looking to be absorbed by other countries. They want to live where they are, but they also want to live in the homes of Jews after they drive them into the sea. It's what they're all about.
There are a lot of countries in the middle east full of non-citizens who are good enough to clean the toilets, operate the airlines, staff the hospitals, pump the oil--but even if they are Muslims they will never become citizens of these countries.
The Palestinians in the refugee areas are highly useful idiots in fomenting violence against Israel. They're always ready for a bit of street theater for the benefit of CNN's cameras & they witlessly send their children off to blow up other people (including other Arabs).
If all of the people who lived in that part of the world were rational beings living in the present, they could do well; consider Israel and Dubai (Dubai even educates its girls). Geography isn't damning this area, but a death-focused, woman-hating ideology is. When life means nothing, and half of the population is cursed, what can anyone expect?