Welfare Benefit Generosity and Refugee Integration

Abstract

This study examines how welfare benefit generosity impacts refugees’ integration into their new country. The effects of welfare benefit generosity are identified from a policy reform that reduced welfare benefits, first for newly arrived refugees, and second for those who had been in the country for at least 10 months. The results suggest that refugees respond quickly to the benefit reduction, but men and women react on different margins. Male refugees enter employment faster when they experience a benefit reduction, whereas no effect on the labor market is found for female refugees. Even though some men succeed in finding a job, both men and women experience a drop in disposable income of 20 percent. This seems to adversely affect women as they seek more health care, are more often hospitalized, and are more often charged with property crimes. No such unintended effects are found for men.