Refugees’ Economic Integration and Firms

Abstract

We explore whether a civic integration exam component dedicated to labor market training, namely the ONA - a type of job search assistance program, boosts refugees’ economic outcomes and the quality of firms they work for. Using linked employer-employee (monthly) data from 2014 to 2021 for the Netherlands and Regression Discontinuity design, we find that taking the ONA sped up and deepened the economic integration of refugees for at least 3 years in terms of increased employment probability and higher hourly wages. We further show that taking the ONA results in refugees working for larger, less routine-task intensive, higher wage firms. These results reflect improvements in both match efficiency and match quality. The ONA therefore does more than reduce search frictions: it equips refugees with the knowledge to navigate the labor market effectively and find employment that aligns better with their existing abilities and human capital.