Opportunities or Benefits: Local Conditions and Refugee Labor Market Integration (Valentin Wett und Katia Gallegos Torres)

We jointly analyze the effects of variations in labor demand and the generosity of welfare benefits at the time of receiving protection on the labor market integration and location choice of refugees. Due to a series of reforms, initially, exogenously dispersed refugees face substantial differences in benefit levels between federal states, as well as the type and time of protection. Higher labor demand increases employment rates, while higher benefits have a small negative effect. The effects last for 2.5 years. Both shocks do not affect the likelihood of remaining in Austria but persistently affect internal migration. Changes in benefit levels have larger effects on employment when labor demand is high.