Labour Markets: Taking in Refugees Creates New Jobs

Research

The accommodation of refugees in 2015 and 2016 not only benefited the migrants themselves, but also the regions that received them. New employment opportunities were created for locals in the host regions as various support services were made available to refugees at the local level. These included accommodation, alimentation, social support and assistance with asylum applications. In this way, statistically speaking, one job subject to social security contributions was created for every 2.4 refugees, as a recent study by ZEW Mannheim in cooperation with the Institute for Employment Research (IAB) and the Federal Ministry for Economic Affairs and Climate Action finds.

The ZEW study shows that employment increased significantly more for women than for men. While employment among men grew at about the same rate as unemployment fell, unemployment among women decreased much less. “This suggests that those who found employment were mainly women who had not previously been registered as unemployed and only entered the labour market once the refugees were taken in, or had been in marginal employment before,” says Dr. Katrin Sommerfeld, head of the ZEW Junior Research Group “Integration of Migrants and Attitudes towards the Welfare State (IMES)” and co-author of the study. Furthermore, especially locals with a low level of education and former migrants benefited from the allocation of refugees, i.e. population groups whose prospects on the labour market are usually negatively affected by immigration.

Still, the positive employment effects did not last for long. Already three years after the refugees were accommodated, the initial increase in employment had declined by almost 50 per cent. The decrease occurred as migrants’ consumer behaviour has changed over time: they no longer receive all the support they initially relied on, as they may have found a job and pay for everyday goods and rent themselves. “A few years after their arrival in Germany, refugees probably still have a lower income than locals. As a result, they consume a larger share of locally produced goods and services. In this way, local employment continues to benefit from refugees, although to a lesser extent than at the beginning,” says Sommerfeld.

For the ZEW study, data from the Central Register of Foreign Nationals (AZR) and the Erstverteilung Asylbegehrende (EASY), a programme for the initial distribution of asylum seekers, provided by the Federal Office for Migration and Refugees, as well as data from the Federal Employment Agency were analysed for the period 2013 to 2018.

In 2015 and 2016, 1.3 million refugees applied for asylum in Germany. Asylum seekers are distributed centrally across the federal states and districts. They are usually assigned a place of residence and are initially subject to mandatory residence, so that they cannot choose their place of residence freely. During the first three months in Germany and as long as they live in a reception centre, they are also subject to a strict employment ban, which means they are generally excluded from the labour market. This allows the authors to isolate labour demand effects.

General documents

The Labor Demand Effects of Refugee Immigration: Evidence from a Natural Experiment