First Time Around: Local Conditions and Multi-Dimensional Integration of Refugees

The paper presented in this ZEW Research Seminar studies the causal effect of local labor market conditions and attitudes towards immigrants at the time of arrival on refugees' multi-dimensional integration outcomes (economic, linguistic, navigational, political, psychological, and social). Using unique dataset on refugees, the authors leverage a centralized allocation policy in Germany where refugees were exogenously assigned to live in specific counties. The study finds that high initial local unemployment negatively affects refugees' economic and social integration: they are less likely to be in education or employment and they earn less. The paper also shows that favorable attitudes towards immigrants promote refugees' economic and social integration. The results suggest that attitudes toward immigrants are equally important as local unemployment rate in shaping refugees' integration outcomes. Using a machine learning classifier algorithm, they find that the results are driven by older people, those with less than tertiary education as well as refugees coming from minor conflict countries. The findings highlight the importance of both initial economic and social conditions for facilitating refugee integration, and have implications for the design of central allocation policies.