Working Paper

The Impact of Refugees on the Labour Market: A Big Splash in a Small Pond?

CEPS Policy Contribution, No 2018/07 Download

Abstract

What impact will recently arrived refugees have on the labour markets of receiving European countries? As a contribution to the debate, this paper looks at the composition of recent refugee inflows and reviews the relevant characteristics of EU labour markets.

Even in the most affected member states, the number of refugees recognised between 2014 and 2017 is small relative to the total population. The potential impact on aggregate wages or on the unemployment rate is therefore not expected to be economically significant. However, many of the recent refugee cohorts in these member states were young low-skilled men. The 2014-17 inflow is thus sizeable relative to the population of this specific group.

The authors of this paper highlight two potential challenges associated with such a concentrated inflow. First, since young low-skilled men are already an economically vulnerable group, higher competition for jobs can further increase this vulnerability and fuel negative (anti- immigrant) sentiment. Second, the labour market sectors relevant for many refugees already face uncertain labour demand due to import competition and continuing technological change.

The authors find that this challenges the medium- and long-term prospects for the integration of refugees. It also calls for attention to be paid to training and upgrading their skills. At the same time, efforts to integrate newcomers should go hand in hand with the better economic inclusion of other vulnerable population groups.