Abstract: This paper studies Denmark’s Start Aid welfare reform, which lowered benefits to refugee immigrants granted residency after the reform date by 40%. The reform induced a sharp immediate increase in labor earnings and employment, but also a strong female labor force withdrawal due to disincentives embedded in the policy. Moreover, the benefit reduction resulted in large reductions in average disposable income and increased crime among adults of both genders and among adolescents. Exploiting the quasi-random allocation of refugees across municipalities with different local labor demand, we show substantial heterogeneity in the persistence and magnitude of the welfare reform’s effects on both employment, job stability, and public expenditures to the immigrants.
For more information and to register for the event, please contact Prof. Daniel Waldinger (firstname.lastname@example.org) and Prof. Mike Gilgraine (email@example.com).