Home Country Socio-Political Conditions, Return Intentions, and Labour Market Outcomes

Abstract

Migration is often temporary, and the intended length of stay in the host country is an important determinant of immigrants' labour market behaviour, human capital investment, and socio-economic integration. In this paper, we investigate whether changes in the socio-political conditions in the home country affect immigrants' return intentions and labour market outcomes. We combine administrative and survey data with precise information on terrorist attacks worldwide. Our identification strategy exploits the quasi-random occurrence of terrorist attacks in the home country relative to the dates of the survey interviews and unemployment spells in Germany. We show that immigrants interviewed after a terrorist attack in their home country are 12 percentage points more likely to wish to remain in Germany permanently. Immigrants react stronger if they are less integrated in Germany and have stronger ties to their home country. Economic theory tells us that revisions to the intended length of stay will affect immigrants' labour market behaviour. Our second key result confirms this hypothesis, showing that immigrants who enter unemployment when a terrorist event hits their home country are 1.7 percentage points more likely to register as unemployed within three months and 1.8 percentage points more likely to be employed within three months than immigrants who enter unemployment in quiet times. Furthermore, among those finding employment within three months, immigrants experiencing terror events receive lower hourly wages and are more likely to work part-time.

Keywords: immigration, terrorism, return migration, unemployment

JEL Classification: J15, J61, J64