combined with IZA DP 924 published in: Review of Economics of the Household, 2010, 8 (1), 105–146
How do dispersal policies affect labour market integration of refugee immigrants subjected to
such policy? To investigate this, we estimate the effects of location characteristics and the
average effect of geographical mobility on the hazard rate into first job of refugee immigrants
subjected to the Danish Dispersal Policy 1986-1998. We correct for selection into relocation
to another municipality by joint estimation of the duration of the first non-employment spell
and time until relocation. The main estimation results are as follows: First, the hazard rate
into first job is increasing in the concentration of fellow countrymen and decreasing in the
regional unemployment rate, the size of the local population and the percentage of
immigrants in the local population. The two latter findings support dispersal policies. The two
former findings emphasize that refugees should be dispersed in big clusters of refugees of
the same ethnic origin across regions with low unemployment. Second, on average,
geographical mobility had large, positive effects on the job finding rate, suggesting that either
relocations were carried out to improve employment prospects, or they were carried out to
improve place utility and thereby lower the reservation wage. Hence, restrictions on placed
refugees’ subsequent migration (or on their initial choice of location) would hamper labour
market integration.
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