Abstract

We jointly examine the impact of labor demand and welfare benefit generosity at the time refugees receive protection on their labor market integration and location choices. A series of reforms has led to refugees, who were initially placed exogenously, experiencing significant differences in benefit levels across federal states and over time. We find that increased labor demand boosts employment rates, whereas higher welfare benefits slightly deter employment. These effects persist for 2.5 years. Neither variable influences the likelihood of refugees staying in Austria, but both have a lasting impact on internal migration patterns. Moreover, changes in welfare benefits exert a greater influence on employment rates in areas with high local labor demand.

Co-authors: Valentin Wett, Katia Gallegos Torres, Andreas Steinmayr