Employment Effects of Dispersal Policies on Refugee Immigrants, Part Ii: Empirical Evidence

Abstract

How do dispersal policies affect labour market integration of refugee immigrants subjected tosuch policy? To investigate this, we estimate the effects of location characteristics and theaverage effect of geographical mobility on the hazard rate into first job of refugee immigrantssubjected to the Danish Dispersal Policy 1986-1998. We correct for selection into relocationto another municipality by joint estimation of the duration of the first non-employment spelland time until relocation. The main estimation results are as follows: First, the hazard rateinto first job is increasing in the concentration of fellow countrymen and decreasing in theregional unemployment rate, the size of the local population and the percentage ofimmigrants in the local population. The two latter findings support dispersal policies. The twoformer findings emphasize that refugees should be dispersed in big clusters of refugees ofthe same ethnic origin across regions with low unemployment. Second, on average,geographical mobility had large, positive effects on the job finding rate, suggesting that eitherrelocations were carried out to improve employment prospects, or they were carried out toimprove place utility and thereby lower the reservation wage. Hence, restrictions on placedrefugees’ subsequent migration (or on their initial choice of location) would hamper labourmarket integration.

Keywords: dispersal policies, employment effects, geographical mobility, refugee immigrants

JEL Classification: J64, J61, J15