Lift the Ban? Initial Employment Restrictions and Refugee Labour Market Outcomes

Abstract

This article investigates the medium to long-term effects on refugee labour market outcomes of the temporary employment bans being imposed on asylum seekers in many countries. Using a newly collected dataset on employment restrictions together with individual data for refugees entering European countries between 1985 and 2012, our empirical strategy exploits the geographical and temporal variation in employment bans generated by their staggered introduction and removal coupled with frequent changes at the intensive margin. We find that exposure to a ban at arrival reduces refugee employment probability in post-ban years by 15%, an impact driven primarily by lower labour market participation. These effects are not mechanical, increase non-linearly in ban length and last up to 10 years post arrival. The detrimental effects of employment bans are concentrated among less educated refugees, translate into lower occupational quality, and seem not to be driven by selective migration. Our causal estimates are robust to several identification tests accounting for the potential endogeneity of employment ban policies, including placebo analysis of non-refugee migrants and an instrumental variable strategy. We estimate a EUR 37.6 billion output loss from the bans imposed on asylum seekers who arrived in Europe during the so-called 2015 refugee crisis.

Safeguarding the Integrity of the Asylum System and the Moral Rights of Rejected Asylum Seekers: A Conditional Right to Remain

“…Moreover, as Maarbach et al (2018) demonstrate, banning the employment of asylum seekers for a considerable time period after arrival not only adversely affects the well-being of refugees but also imposes significant costs on the host country's economy. Fasani et al (2020) come to similar conclusions about the detrimental economic effect of employment bans for asylum seekers. -A possible solution, that we cannot discuss at length here, which would both reinforce the right to work of asylum seekers and respond to economic shortages in host countries would be to set up temporary labour migration programs and prioritize asylum seekers in recruitment by issuing temporary work visas to them (see Bauböck and Ruhs 2021).…”

“…In Europe such policies would result in a race to the bottom and further undermine solidarity among EU states with regard to refugee admission and protection.Concerning restricted access to the labor market, we can observe that overall employment bans on asylum applicants are a persistent and widespread feature of Western countries' asylum policies. In 2015, at the peak of the refugee crisis, only four European countries (Greece, Norway, Portugal and Sweden) allowed asylum seekers immediate access to the labour market (Fasani et al 2020). Despite this policy pattern there is, however, a lack of academic evidence that the right to work acts as a driver for asylum seeking migration.…”

The economic and fiscal effects on the United States from reduced numbers of refugees and asylum seekers

“…Labor market integration is also contingent on general economic conditions around the time of arrival (Mask 2020;Aksoy et al 2020). Labor force participation by asylum seekers is reduced by the barriers to working they face upon arrival (Hainmueller et al 2016;Marbach et al 2018;Slotwinski et al 2019;Fasani et al 2021). Thus, while work bans are likely to deter asylum seekers from coming (Buggle et al 2020), they can also tend to reduce the positive economic eects of asylum seekers.…”

Determinants of welfare benefit use of immigrant groups - longitudinal evidence from Germany

“…Employers may be met with high costs if they choose to hire refugees who have only received a delay of deportation -rather than protection status -and cannot be certain that refugees without protection status will remain in Germany (Brücker et al, 2016b). In addition, employment prohibitions upon arrival in Germany may discourage asylum applicants from seeking work later once permission is eventually granted (Brell et al, 2020;Fasani et al, 2021). The refugee penalty merits further exploration to determine how these factors may affect labor market outcomes.…”