Refugee Integration and the Key Role of Early Access to Labour Markets

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The recent invasion of Ukraine has resulted in an enormous flow of refugees towards other European countries. Francesco Fasani argues that offering immediate education opportunities to the kids and labour market prospects to the mothers seem the top priorities in the policy response of hosting countries.

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The recent invasion of Ukraine has resulted in an enormous flow of refugees towards other European countries. Francesco Fasani argues that offering immediate education opportunities to the kids and labour market prospects to the mothers seem the top priorities in the policy response of hosting countries.  

Almost three months into the invasion of Ukraine by the Russian army, a staggering 6.2 million Ukrainian citizens have been forced to leave their home country and seek refuge in other European countries. This figure corresponds to 17% of the Ukrainian resident population at the onset of the conflict and does not include the over 8 million citizen who have been internally displaced (i.e. who abandoned their homes and moved elsewhere in Ukraine). This humanitarian crisis vastly dwarfs the 2015-16 refugee crisis, when about 1.5 million asylum seekers – predominately from Syria and Afghanistan – reached the European Union. The presence of a large (approximately 1.7 million individuals in 2021) and well-integrated Ukrainian diaspora across European countries will certainly be a positive factor in facilitating the integration of Ukrainian refugees. Nevertheless, the size of the flows, their suddenness and their demographics – the vast majority of the refugees are minors, women and elderly people -clearly point at major challenges ahead. Offering immediate education opportunities to the kids and labour market prospects to the mothers seem the top priorities in the policy response of hosting countries.

Employment bans across Europe and their long-lasting consequences

 

Evidence from past refugee waves suggests that the socio-economic integration of forced migrants is often difficult and slow. Part of the difficulties refugees face trying to integrate into host societies is inherently associated with the consequences of the traumas they suffered and with the forced and unplanned nature of their migration. Host countries can nevertheless affect the speed and quality of refugee integration by putting in place adequate and effective asylum policies.  Determining which specific features of asylum legislation can accelerate or hinder refugee integration lies at the very core of the current policy discussion.

A common and highly debated asylum policy is to impose temporary employment bans that prevent asylum seekers from working during the application process. Unless the duration is statutorily limited, these bans are often lifted only after the applicant is granted refugee status. In Europe, though such employment ban policies have become less strict over time, most countries still implement some form of temporary ban for asylum seekers. 

In a recent paper with T.Frattini and L.Minale, we assess the medium to long-term effects of employment bans on the labour market outcomes of refugees. We do so by gathering almost 30 years of data on the presence and length of employment bans across 19 European countries and combining them with cross-sectional information on refugees who arrived from 1985 onwards from the EU Labour force Survey. Our empirical approach exploits the geographical and temporal variation in employment bans generated by the staggered introduction or removal of bans, together with frequent changes of the bans’ durations. These policy changes deliver variation in ban exposure both across refugee entry cohorts within the same destination country and within entry cohorts across destination countries. Using this empirical approach, we derive two major findings.

First, the detrimental effects of ban are large. Being banned from employment at entry reduces refugee employment probability in the medium run by 8.9 percentage points, or 15.2 percent: this negative effect is explained primarily by a 9.2 percentage point lower labour market participation than by a higher unemployment probability (see blue diamonds in Figure1). To get an idea of the quantitative relevance of the impact, we calculate it is equivalent to about a 4-year delay in the integration process. Our second key result is that the negative effects of employment bans are highly persistent, with employment gaps remaining sizeable up to 10 years post arrival for refugees exposed to bans, despite growing smaller over time.

To make sure that our results can be interpreted as causal we present in the paper a number of tests. Among them is a placebo analysis on a sample of non-refugee migrants that closely resemble the refugees but were not subject to the employment ban, which delivers a precisely estimated zero effect (green dots in Figure 1).

To identify which mechanisms may be at work, we first document that the detrimental effects of employment restrictions concentrate among less-educated refugees, suggesting that bans mainly harm migrants whose employability in host countries is already relatively limited. Then, by considering a broader range of outcomes, we observe that banned refugees also experience lower occupational quality (lower likelihood of employment in a high skilled occupation and higher probability to have a temporary job), report lower proficiency in the host country language, and have more health issues and a greater likelihood of receiving benefits.

Figure 1: Effect of employment bans on labour market outcomes

Policy Implications

Whereas allowing asylum seekers some months to recover physically and psychologically may be beneficial for their long-term integration, forcing them out of the labour market seems an ill-conceived approach. Granting immediate labour market access to those willing to search for a job – while offering income support to those unable to do so – seems a far more preferable approach.In 2015, at the peak of the previous “refugee crisis” in Europe, only four European countries (Greece, Norway, Portugal and Sweden) allowed asylum seekers immediate access to their labour markets, with most other countries imposing bans of between 2 and 12 months, or even an indefinite restriction in the case of Ireland and Lithuania. Luckily, the EU approach on the matter has changed in response to the ongoing crisis in Ukraine. On the 3rd of March, the European Commission has adopted a proposal to activate the Temporary Protection Directive to offer assistance to Ukrainian citizens (and third-country nationals legally residing in Ukraine) who fled the country after the Russian invasion. Granting temporary protection status will provide immediate protection and rights – including the right to labour market access – to all eligible individuals, avoiding congestion of asylum systems of Member States as well as damaging delays for the asylum seekers. Removing barriers rather than adding hurdles is the right way to go when it comes to integrating refugees in host countries.

About Post Author

Francesco Fasani

Francesco Fasani is Associate Professor at the Department of Economics, Management and Quantitative Methods at the University of Milan. He is also associated researcher at CReAM, CEPR and IZA. He is a leading expert in the economics of migration. His research has been published in high-impact journals such as the Journal of European Economic Association, Journal of Human Resources, Journal of Development Economics, Review of Economics and Statistics among others. He has also advised the public administration on the design and implementation of migration policies.

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