Working Paper: CEPR ID: DP14765
Authors: Francesco Fasani; Tommaso Frattini; Luigi Minale
Abstract: This article investigates the medium to long-term effects on refugee labour market outcomes of the temporary employment bans being imposed in many countries on recently arrived asylum seekers. Using a newly collected dataset covering almost 30 years of employment restrictions together with individual data for refugees entering European countries between 1985 and 2012, our empirical strategy exploits the geographical and temporal variation in employment bans generated by staggered introduction and removal coupled with frequent changes at the intensive margin. We find that exposure to a ban at arrival reduces refugee employment probability in post-ban years by 15%, an impact driven primarily by lower labour market participation. These effects are not mechanical, since we exclude refugees who may still be subject to employment restrictions, are non-linear in ban length, confirming that the very first months following arrival play a key role in shaping integration prospects, and last up to 10 years post arrival. We further demonstrate that the detrimental effects of employment bans are concentrated among less educated refugees, translate into lower occupational quality, and seem not to be driven by selective migration. Our causal estimates are robust to several identification tests accounting for the potential endogeneity of employment ban policies, including placebo analysis of non-refugee migrants and an instrumental variable strategy. To illustrate the costs of these employment restrictions, we estimate a EUR 37.6 billion output loss from the bans imposed on asylum seekers who arrived in Europe during the so-called 2015 refugee crisis.
Keywords: asylum seekers; economic assimilation; asylum policies
JEL Codes: F22; J61; K37
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| employment ban at arrival (J68) | refugee employment probability in the medium run (J68) |
| employment ban at arrival (J68) | labour market participation rate (J49) |
| employment ban at arrival (J68) | integration process delay (F15) |
| employment ban length (J63) | refugee labour market outcomes (J68) |
| employment ban (J68) | occupational quality among less educated refugees (I25) |
| employment bans (J68) | economic cost of EUR 376 billion (O52) |
| employment bans (J68) | persistent effects lasting up to 10 years (C41) |