IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp15901.html
   My bibliography  Save this paper

The Labor Market Effects of Restricting Refugees' Employment Opportunities

Author

Listed:
  • Ahrens, Achim

    (ETH Zurich)

  • Beerli, Andreas

    (ETH Zurich)

  • Hangartner, Dominik

    (Stanford University)

  • Kurer, Selina

    (ETH Zurich)

  • Siegenthaler, Michael

    (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.

Suggested Citation

  • Ahrens, Achim & Beerli, Andreas & Hangartner, Dominik & Kurer, Selina & Siegenthaler, Michael, 2023. "The Labor Market Effects of Restricting Refugees' Employment Opportunities," IZA Discussion Papers 15901, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15901
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp15901.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage Bargaining with On-the-Job Search: Theory and Evidence," Econometrica, Econometric Society, vol. 74(2), pages 323-364, March.
    2. Marta Lachowska & Alexandre Mas & Raffaele Saggio & Stephen A. Woodbury, 2022. "Wage Posting or Wage Bargaining? A Test Using Dual Jobholders," Journal of Labor Economics, University of Chicago Press, vol. 40(S1), pages 469-493.
    3. Sari Pekkala Kerr & William R. Kerr & William F. Lincoln, 2015. "Skilled Immigration and the Employment Structures of US Firms," Journal of Labor Economics, University of Chicago Press, vol. 33(S1), pages 147-186.
    4. Till von Wachter, 2020. "The Persistent Effects of Initial Labor Market Conditions for Young Adults and Their Sources," Journal of Economic Perspectives, American Economic Association, vol. 34(4), pages 168-194, Fall.
    5. Michael Amior & Alan Manning, 2020. "Monopsony and the wage effects of migration," CEP Discussion Papers dp1690, Centre for Economic Performance, LSE.
    6. Anna Piil Damm, 2009. "Ethnic Enclaves and Immigrant Labor Market Outcomes: Quasi-Experimental Evidence," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 281-314, April.
    7. Azlor, Luz & Damm, Anna Piil & Schultz-Nielsen, Marie Louise, 2020. "Local labour demand and immigrant employment," Labour Economics, Elsevier, vol. 63(C).
    8. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    9. Black, Dan A, 1995. "Discrimination in an Equilibrium Search Model," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 309-333, April.
    10. Boris Hirsch & Elke J. Jahn, 2015. "Is There Monopsonistic Discrimination against Immigrants?," ILR Review, Cornell University, ILR School, vol. 68(3), pages 501-528, May.
    11. repec:hal:spmain:info:hdl:2441/dc0ckec3fcb29ms9850c12h1p is not listed on IDEAS
    12. Olof Åslund & John Östh & Yves Zenou, 2010. "How important is access to jobs? Old question--improved answer," Journal of Economic Geography, Oxford University Press, vol. 10(3), pages 389-422, May.
    13. Michael A. Clemens & Ethan G. Lewis & Hannah M. Postel, 2018. "Immigration Restrictions as Active Labor Market Policy: Evidence from the Mexican Bracero Exclusion," American Economic Review, American Economic Association, vol. 108(6), pages 1468-1487, June.
    14. Suresh Naidu & Yaw Nyarko & Shing-Yi Wang, 2016. "Monopsony Power in Migrant Labor Markets: Evidence from the United Arab Emirates," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1735-1792.
    15. Philip Oreopoulos & Till von Wachter & Andrew Heisz, 2012. "The Short- and Long-Term Career Effects of Graduating in a Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 1-29, January.
    16. Mette Foged & Linea Hasager & Giovanni Peri, 2024. "Comparing the Effects of Policies for the Labor Market Integration of Refugees," Journal of Labor Economics, University of Chicago Press, vol. 42(S1), pages 335-377.
    17. Foged, Mette & van der Werf, Cynthia, 2023. "Access to language training and the local integration of refugees," Labour Economics, Elsevier, vol. 84(C).
    18. Hannes Schwandt & Till von Wachter, 2019. "Unlucky Cohorts: Estimating the Long-Term Effects of Entering the Labor Market in a Recession in Large Cross-Sectional Data Sets," Journal of Labor Economics, University of Chicago Press, vol. 37(S1), pages 161-198.
    19. Dagnelie, Olivier & Mayda, Anna Maria & Maystadt, Jean-François, 2019. "The labor market integration of refugees in the United States: Do entrepreneurs in the network help?," European Economic Review, Elsevier, vol. 111(C), pages 257-272.
    20. Francesco Fasani & Tommaso Frattini & Luigi Minale, 2021. "Lift the Ban? Initial Employment Restrictions and Refugee Labour Market Outcomes," Journal of the European Economic Association, European Economic Association, vol. 19(5), pages 2803-2854.
    21. 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).
    22. Jacob Nielsen Arendt & Christian Dustmann & Hyejin Ku, 2022. "Refugee migration and the labour market: lessons from 40 years of post-arrival policies in Denmark," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 38(3), pages 531-556.
    23. Courtney Brell & Christian Dustmann & Ian Preston, 2020. "The Labor Market Integration of Refugee Migrants in High-Income Countries," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 94-121, Winter.
    24. Anna Sokolova & Todd Sorensen, 2021. "Monopsony in Labor Markets: A Meta-Analysis," ILR Review, Cornell University, ILR School, vol. 74(1), pages 27-55, January.
    25. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    26. Olof Åslund & Dan-Olof Rooth, 2007. "Do when and where matter? initial labour market conditions and immigrant earnings," Economic Journal, Royal Economic Society, vol. 117(518), pages 422-448, March.
    27. Hugh Cassidy & Tennecia Dacass, 2021. "Occupational Licensing and Immigrants," Journal of Law and Economics, University of Chicago Press, vol. 64(1), pages 1-28.
    28. Briggs Depew & Peter Norlander & Todd A. Sørensen, 2017. "Inter-firm mobility and return migration patterns of skilled guest workers," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(2), pages 681-721, April.
    29. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage bargaining with on-the-job search: theory and evidence," SciencePo Working papers hal-03471856, HAL.
    30. Marbach, Moritz & Hainmueller, Jens & Hangartner, Dominik, 2017. "The Long-Term Impact of Employment Bans on the Economic Integration of Refugees," Research Papers repec:ecl:stabus:3618, Stanford University, Graduate School of Business.
    31. LoPalo, Melissa, 2019. "The effects of cash assistance on refugee outcomes," Journal of Public Economics, Elsevier, vol. 170(C), pages 27-52.
    32. Orley C. Ashenfelter & Henry Farber & Michael R Ransom, 2010. "Labor Market Monopsony," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 203-210, April.
    33. Paul Beaudry & David A. Green & Benjamin Sand, 2012. "Does Industrial Composition Matter for Wages? A Test of Search and Bargaining Theory," Econometrica, Econometric Society, vol. 80(3), pages 1063-1104, May.
    34. Xuening Wang, 2021. "US Permanent Residency, Job Mobility, and Earnings," Journal of Labor Economics, University of Chicago Press, vol. 39(3), pages 639-671.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. Campo, Francesco & Giunti, Sara & Mendola, Mariapia & Tura, Giulia, 2023. "Political Backlash to Refugee Settlement: Cultural and Economic Drivers," IZA Discussion Papers 16245, Institute of Labor Economics (IZA).
    3. 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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aksoy, Cevat Giray & Poutvaara, Panu & Schikora, Felicitas, 2023. "First time around: Local conditions and multi-dimensional integration of refugees," Journal of Urban Economics, Elsevier, vol. 137(C).
    2. Francesco Fasani & Tommaso Frattini & Luigi Minale, 2021. "Lift the Ban? Initial Employment Restrictions and Refugee Labour Market Outcomes," Journal of the European Economic Association, European Economic Association, vol. 19(5), pages 2803-2854.
    3. Jacob Nielsen Arendt & Christian Dustmann & Hyejin Ku, 2022. "Refugee migration and the labour market: lessons from 40 years of post-arrival policies in Denmark," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 38(3), pages 531-556.
    4. Dahlberg, Matz & Egebark, Johan & Vikman, Ulrika & Özcan, Gülay, 2024. "Labor market integration of refugees: RCT evidence from an early intervention program in Sweden," Journal of Economic Behavior & Organization, Elsevier, vol. 217(C), pages 614-630.
    5. 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).
    6. Foged, Mette & Hasager, Linea & Peri, Giovanni & Arendt, Jacob Nielsen & Bolvig, Iben, 2023. "Intergenerational spillover effects of language training for refugees," Journal of Public Economics, Elsevier, vol. 220(C).
    7. Toman Barsbai & Andreas Steinmayr & Christoph Winter, 2022. "Immigrating into a Recession: Evidence from Family Migrants to the U.S," Working Papers 2022-01, Faculty of Economics and Statistics, Universität Innsbruck.
    8. Foged, Mette & van der Werf, Cynthia, 2023. "Access to language training and the local integration of refugees," Labour Economics, Elsevier, vol. 84(C).
    9. Demirci, Murat & Kırdar, Murat Güray, 2023. "The labor market integration of Syrian refugees in Turkey," World Development, Elsevier, vol. 162(C).
    10. Alan Manning, 2021. "Monopsony in Labor Markets: A Review," ILR Review, Cornell University, ILR School, vol. 74(1), pages 3-26, January.
    11. Cole, Matthew A. & Jabbour, Liza & Ozgen, Ceren & Yumoto, Hiromi, 2024. "Refugees' Economic Integration and Firms," IZA Discussion Papers 16828, Institute of Labor Economics (IZA).
    12. Gabriele Lucchetti & Alessandro Ruggieri, 2023. "Unlucky migrants: Scarring effect of recessions on the assimilation of the foreign born," Discussion Papers 2023-09, University of Nottingham, GEP.
    13. Michael Amior & Alan Manning, 2020. "Monopsony and the wage effects of migration," CEP Discussion Papers dp1690, Centre for Economic Performance, LSE.
    14. Arendt, Jacob Nielsen & Bolvig, Iben, 2023. "Trade-offs between work-first and language-first strategies for refugees," Economics of Education Review, Elsevier, vol. 92(C).
    15. Roger Blair & Perihan Saygin, 2021. "Uncertainty and the marginal revenue product–wage gap," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(3), pages 564-569, April.
    16. Fasani, Francesco & Frattini, Tommaso & Pirot, Maxime, 2023. "From Refugees to Citizens: Labor Market Returns to Naturalization," CEPR Discussion Papers 18675, C.E.P.R. Discussion Papers.
    17. Dami'an Vergara, 2022. "Minimum Wages and Optimal Redistribution," Papers 2202.00839, arXiv.org, revised Dec 2022.
    18. Daniel Auer & Michaela Slotwinski & Achim Ahrens & Dominik Hangartner & Selina Kurer & Stefanie Kurt & Alois Stutzer, 2024. "Social Assistance and Refugee Crime," CESifo Working Paper Series 11051, CESifo.
    19. Peter Norlander, 2021. "Do guest worker programs give firms too much power?," IZA World of Labor, Institute of Labor Economics (IZA), pages 484-484, June.
    20. Amior, Michael & Stuhler, Jan, 2023. "Immigration, Monopsony and the Distribution of Firm Pay," IZA Discussion Papers 16692, Institute of Labor Economics (IZA).

    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
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp15901. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.