Social capital and labor market integration: a comparative study of refugees and first generation migrants in Germany (joint work with Klarita Gërxhani)

Europe is increasingly experiencing large migration waves due to political, ethnic and religious conflicts. Only in 2015, there were 65 million refugees in the world and more than 2 million in Europe. More than 70 per cent of the refugees with an accepted protection status are of working age. Though integration into the labor market would be essential for their assimilation in the host country, refugees are typically in a disadvantaged position compared to other migrants. This study aims to examine the role of job-related social ties (i.e. social contacts used to find a job) in the transition to the first job among refugees and first generation migrants in Germany. From a methodological point of view, it is challenging to identify the causal effect of social ties on labor market prospects of migrants. This is because (potential) connections to established migrants are related to their decision to migrate and their choice of destination country, including place of residence or locality. We are able to address these issues of endogeneity and selection bias by relying on a very rich dataset (i.e., the newest data from the IAB-SOEP Migration sample) and most importantly, on a ‘natural experiment’. The experiment refers to a random spatial allocation of migrants and refugees by German authorities, minimizing thereby the likelihood of migrants’ inflow in particular regions to be driven by availability of social ties. Applying duration models, we find that refugees have a lower transition rate to their first job in Germany compared to other migrants. However, using social ties to find a job facilitates refugees’ labor market integration significantly, without having any influence on other migrants’. The effect of job-related social ties operates neither via availability of pre-migration connections nor via the size of co-ethnic community, suggesting that this is driven by new connections outside refugees’ ethnic community.

Keywords: social ties, refugees, first generation migrants, labor market integration, first job, Germany, IAB-SOEP Migration sample


Does free movement of workers boost immigrant employment? New evidence from the German case (joint work with Herbert Brücker and Agnese Romiti)

We study how the introduction of free movement of workers (FMW) for citizens from countries participating in the Common Single Market affected migrants’ labour market integration in Germany. We focus on two complex issues: Firstly, whether and how FMW impacted on the composition of the migrant population in terms of human capital characteristics such as qualification, language proficiency, cognitive abilities, and professional experience. Secondly, we analyse whether and how FMW affected migrants’ labour market integration as measured by the duration of getting the first job. Exploiting rich longitudinal data from the IAB-SOEP migration sample, we identify FMW effects on migrants’ outcomes by imitating a regression discontinuity design. Findings reveal that the introduction of the FMW indeed had a substantial impact on the composition of the migrant population in form of a higher influx of skilled and educated workforce. Moreover, the results imply that FMW improved migrants’ labour market integration when measured by the probability of first job entry one year after arrival to Germany significantly. Overall, our findings suggest that FMV increased welfare by (i) raising the scale of migration and the skill level of migrants, and (ii) reducing the waiting-time for labour market integration and, hence, the unemployment rate of new arrivals.

Keywords: free movement of workers, EU, migration, transition rate, regression discontinuity, inverse-probability-matching.