Labor Market Effects of Ukrainian Refugees in Germany

Abstract

Russia’s full-scale invasion of Ukraine in 2022 triggered one of Europe’s largest refugee inflows since World War II. Unlike previous refugee inflows, displaced Ukrainians were granted immediate rights to work and access to social services, creating a unique opportunity to study the labor market effects of a relatively homogeneous refugee inflow. Using administrative data on refugees combined with district-level quarterly labor market statistics and applying a shift-share instrumental variable approach that exploits the interaction between predetermined refugee center capacities (share) and the intensity of Russian bombing in Ukraine (shift), we find that inflows of Ukrainian refugees have a positive effect on native full-time employment and apprenticeships in Germany, while the effect on marginal (‘Minijob’) employment is weaker and less consistent. We examine the underlying mechanisms highlighting the role of complementarity based on skills and tasks, sector-specific heterogeneity, growing economy and creation of demand on services and goods.