Lift the ban? Labour Market Restrictions and the Employment Outcomes of Refugees
Many countries impose temporary employment bans to recently arrived asylum seekers, preventing them from taking up legal employment while their refugee status is assessed. In this paper, we assess the long-term impact of these bans on refugees’ labour market integration. We use micro-data from the European Labour Force Survey that allows identifying refugees and combine them with newly collected data spanning over almost 30 years on the presence and length of employment bans across European countries. We estimate DD regressions exploiting geographical and temporary variation in employment bans. Our estimates imply that being exposed to an employment ban at arrival reduces employment probability in the medium-run by 15%. These effects persist over time – fading away only after about 10 years – and are non-linear in the length of ban duration. Our causal estimates are robust to a number of identification tests: a placebo run on non-refugee migrants, a triple DD where other migrants are used as the control group; and an IV strategy based on the 2003 EU directive setting a maximum duration to employment bans. The negative impact on employment primarily comes from reduced participation, suggesting that bans may persistently push refugees out of the labour market and into welfare.