Labor Market Integration, Local Conditions and Inequalities : Evidence from Refugees in Switzerland

The paper examines the patterns of economic integration of refugees in Switzerland, a countrywith a long tradition of hosting refugees, a top-receiving host in Europe, and a prominent example of a multiculturalsociety. It relies on a unique longitudinal dataset consisting of administrative records and social securitydata for the universe of refugees in Switzerland over 1998–2018. This data is used to reconstruct theindividual-level trajectories of refugees and to follow them since arrival over the life-cycle. The study documents thepatterns of labor-market integration, and highlights the heterogeneity by gender and age at arrival. Refugees’labor-market performance is compared to natives’ and other groups of migrants’ labor-market performance. The empiricalanalysis exploits the government dispersal policy in place since 1998, which consists of the random allocation ofrefugees across cantons, to identify the causal effects of the local initial conditions. The study finds that higherunemployment rates at arrival slow down the integration process, whereas the existence of a co-ethnic network doesnot consistently lead to a faster integration. It is shown that in locations where refugees face relatively morehostile attitudes by natives upon arrival, they integrate at a faster pace, probably due to a greater effort undertakenin environments that are more hostile. Together these results, highlight the importance of an early entry in thelabor market of the host country, and the need to take a longer run perspective when examining the effectiveness ofpolicies, as the effects may vary over time and different complementary interventions may be needed in the short vs. long-run.