Economic Integration of Refugees in Germany - a Question of the Institutional Framework

Past research has already provided evidence that refugees are one of the most vulnerable groups in Europe in respect of labor market integration. A causal analysis of this finding is still missing. We argue that labor market access and outcomes are shaped by two key dimensions: First, the institutional framework namely the residence title the humanitarian migrant is granted. Second: Vocational and academic degrees need to be recognized in order to succeed in applying for a job because Gatekeepers have difficulties to assess the value of the educational degrees.

To test this assumption, first, the paper aims at explaining which groups decide to get their educational certificates recognized. We assume that this decision is mainly driven by the residence title the refugee is granted. Second, we test if a recognition of certificates helps refugees to get access to the labor market and a job matching their education. Third, we analyze if recognized certificates help to generate superior outcomes in respect of gross-income. With this approach we are able to paint a broad picture of labor market access and selection mechanisms.

The analyzed data is the IAB-BAMF-SOEP Refugee Survey which is representative for all people that applied for asylum between January 1^st 2013 and January 31^st 2016 in Germany. In order to avoid endogeneity we restricted the sample to people that are between 18 and 65 years old, hold a title that allows to work, and live in Germany longer than 3 months.

First analysis suggests that the institutional framework is crucial for labor market integration. Those that are granted a safe status invest in labor market integration, such as recognition of certificates. In turn, recognized certificates help by increasing the chances of employment in general and avoiding an education-occupation mismatch. This in turn provides higher income.