A new GLO Discussion Paper studies the effect of the 2015 refugee crisis on the integration of existing immigrants in Germany originating from Turkey and Middle- Eastern and North-African countries. They improved economically due to the increased demand for culturally similar goods and services induced by the new but culturally similar refugees, while their assimilation of German identity was unaffected.
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GLO Discussion Paper No. 579, 2020
How do new immigration flows affect existing immigrants? Evidence from the refugee crisis in Germany – Download PDF
by Deole, Sumit & Huang, Yue
GLO Fellow Sumit Deole
Author Abstract: We apply difference-in-differences regressions to study the impact of the 2015 refugee crisis in Germany on the culturally closer diaspora of existing immigrants originating from Turkey and Middle- Eastern and North-African countries (TMENA). Our identification allows us to emphasize the role of immigrants’ culture in estimating immigration’s socio-economic impact. Additionally, we distinguish between the labor demand and labor supply effects associated with immigration, which enables us to reflect on the ambiguous labor market impact of immigration suggested in the existing literature. In particular, we find that TMENA immigrants experienced a substantial reduction in unemployment in 2015, consistent with the differential demand shock induced by refugees’ consumption of culturally similar goods and services. However, the unemployment effects dissipated starting in 2016, coinciding with refugees’ delayed yet incremental labor market integration. We also consider the social impact of the refugee crisis and find that while worries about immigration increased among all respondents, the increases were statistically significantly smaller among TMENA immigrants, primarily due to their cultural proximity to arriving refugees. Our results suggest that TMENA immigrants’ assimilation of German identity was unaffected by the refugee crisis.
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