The Impact of Migrant Enclaves on Labor Market Integration: Evidence from Refugees in Germany

Abstract

This paper observes the causal impact of migrant enclaves on the labor market outcome of refugees in Germany after the 2015 refugee crisis. I analyze a sample of refugees from eight non-European countries of origin in the period 2015-2019. Using individual level data from a survey of refugees conducted by the German Socio-Economic Panel and regional level data from the German Federal Statistical Office and Eurostat Regional Statistics, I estimate an instrumental variables specification for a standard model of employment, including instrumented measures of enclave density and size with the commonly used Bartik or shift-share instrument, which predicts these values based on previous migrant shares. Controlling for individual and regional characteristics and region fixed effects, I find past shares to be a strong predictor of present enclave characteristics, and that these enclaves have an insignificant effect on employment and labor force participation and a significant adverse effect on wage.