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The Labor Market Effects of Restricting Refugees’ Employment Opportunities

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Abstract
Refugees, and immigrants more generally, often do not have access to all jobs in the labor market. We argue that restrictions on employment opportunities help explain why immigrants have lower employment and wages than native citizens. To test this hypothesis, we leverage refugees’ exogenous geographic assignment in Switzerland, within-canton variation in labor market restrictions, and linked register data 1999–2016. We document large negative employment and earnings effects of banning refugees from working in the first months after arrival, from working in certain sectors and regions, and from prioritizing residents over refugees. Consistent with an effect of outside options on wages, removing 10% of jobs reduces refugees’ hourly wages by 2.8% and increases the wage gap to similar host-country citizens in similar jobs by 2.2%. Furthermore, we show that restrictions reduce refugees’ earnings even after they cease applying. Restrictions do not spur refugee emigration nor improve earnings of non-refugee immigrants.

Suggested Citation

  • Achim Ahrens & Andreas Beerli & Dominik Hangartner & Selina Kurer & Michael Siegenthaler, 2023. "The Labor Market Effects of Restricting Refugees’ Employment Opportunities," KOF Working papers 22-510, KOF Swiss Economic Institute, ETH Zurich.
    • Handle: RePEc:kof:wpskof:22-510
    DOI: 10.3929/ethz-b-000595935
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    Cited by:

    1. Francesco Fasani & Tommaso Frattini & Maxime Pirot, 2023. "From Refugees to Citizens: Labor Market Returns to Naturalization," Development Working Papers 489, Centro Studi Luca d'Agliano, University of Milano, revised 11 Jun 2024.
    2. Müller, Tobias & Pannatier, Pia & Viarengo, Martina, 2023. "Labor market integration, local conditions and inequalities: Evidence from refugees in Switzerland," World Development, Elsevier, vol. 170(C).

    More about this item

    Keywords

    Labor market integration; migration; labor market policies; labor market institutions; monopsony; refugees; employment; wages; outside options; employment opportunities;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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