Ethnic networks can foster the economic integration of refugees

Abstract

There is widespread concern in Europe and other refugee-receiving continents that living in an enclave of coethnics hinders refugees’ economic and social integration. Several European governments have adopted policies to geographically disperse refugees. While many theoretical arguments and descriptive studies analyze the impact of spatially concentrated ethnic networks on immigrant integration, there is limited causal evidence that sheds light on the efficacy of these policies. We provide evidence by studying the economic integration of refugees in Switzerland, where some refugees are assigned to live in a specific location upon arrival and, by law, are not permitted to relocate during the first 5 y. Leveraging this exogenous placement mechanism, we find that refugees assigned to locations with many conationals are more likely to enter the labor market. This benefit is most pronounced about 3 y after arrival and weakens somewhat with longer residency. In addition, we find that, among refugees employed by the same company, a high proportion share nationality, ethnicity, or language, which suggests that ethnic residential networks transmit information about employment opportunities. Together, these findings contribute to our understanding of the importance of ethnic networks for facilitating refugee integration, and they have implications for the design of refugee allocation policies.