The Long-Term Impact of Employment Bans on the Economic Integration of Refugees

38 Pages Posted: 29 Nov 2017 Last revised: 30 Aug 2018

See all articles by Moritz Marbach

Moritz Marbach

ETH Zurich - Department of Humanities, Social and Political Sciences

Jens Hainmueller

Stanford University - Department of Political Science; Stanford Graduate School of Business; Stanford Immigration Policy Lab

Dominik Hangartner

London School of Economics & Political Science (LSE); Stanford Immigration Policy Lab

Date Written: August 1, 2018

Abstract

Many European countries impose employment bans that prevent asylum seekers from entering the local labor market for a certain waiting period upon arrival. We provide evidence on the long-term effects of these employment bans on the subsequent economic integration of refugees. We leverage a natural experiment in Germany, where a court ruling prompted a reduction in the length of the employment ban. We find that, five years after the waiting period was reduced, employment rates were about 20 percentage points lower for refugees who, upon arrival, had to wait for an additional seven months before they were allowed to enter the labor market. It took up to ten years for this employment gap to disappear. Our findings suggest that longer employment bans considerably slowed down the economic integration of refugees and reduced their motivation to integrate early on after arrival. A marginal social cost analysis for the study sample suggests that this employment ban cost German taxpayers about 40 million Euros per year, on average, in terms of welfare expenditures and forgone tax revenues from unemployed refugees.

Keywords: asylum policy, refugee migration, economic integration, employment ban, labor market

Suggested Citation

Marbach, Moritz and Hainmueller, Jens and Hangartner, Dominik, The Long-Term Impact of Employment Bans on the Economic Integration of Refugees (August 1, 2018). Stanford-Zurich Immigration Policy Lab Working Paper No. 17-03; Stanford University Graduate School of Business Research Paper No. 17-72; Forthcoming in Science Advances. Available at SSRN: https://ssrn.com/abstract=3078172 or http://dx.doi.org/10.2139/ssrn.3078172

Moritz Marbach

ETH Zurich - Department of Humanities, Social and Political Sciences ( email )

Haldeneggsteig 4
Zurich, Zurich 8006
Switzerland

Jens Hainmueller (Contact Author)

Stanford University - Department of Political Science ( email )

Stanford, CA 94305
United States

HOME PAGE: http://www.stanford.edu/~jhain/

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Stanford Immigration Policy Lab

30 Alta Road
Stanford, CA 94305
United States

Dominik Hangartner

London School of Economics & Political Science (LSE) ( email )

Departments of Government and Methodology
Houghton Street
London, WC2A 2AE
United Kingdom

Stanford Immigration Policy Lab

30 Alta Road
Stanford, CA 94305
United States

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