The Labor Market Effects of Restricting Refugees’ Employment Opportunities

Achim Ahrens, Andreas Beerli (), Dominik Hangartner (), Selina Kurer () and Michael Siegenthaler
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Andreas Beerli: KOF Swiss Economic Institute, ETH Zurich, Switzerland
Dominik Hangartner: Public Policy Group, ETH Zurich, Switzerland
Selina Kurer: Public Policy Group, ETH Zurich, Switzerland

No 22-510, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

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.

Keywords: Labor market integration; migration; labor market policies; labor market institutions; monopsony; refugees; employment; wages; outside options; employment opportunities (search for similar items in EconPapers)
JEL-codes: J08 J31 J42 J68 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2023-01
New Economics Papers: this item is included in nep-eur, nep-int and nep-ure
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Citations: View citations in EconPapers (3)

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