Abstract

This study investigates the effect of residency obligation, mandated by the 2016 German "Integration Act" for approved asylum seekers, on their labor market outcomes. We assess compliance with these regulations, considering the asylum application approval date (and the assigned federal state). Proponents of this policy argue that compulsory residency can discourage secondary rural-urban migration and the emergence of parallel communities. However, concerns exist about its potential adverse impact on labor market integration, stemming from limited access to existing ethnic networks. To investigate the effects on labor market outcomes, we employ several analytical approaches, including Difference-in-Differences (DD), and Regression Discontinuity Design (RDD). Our analysis utilizes two comprehensive datasets, namely the Integrated Employment Biography (IEB) and Immigration Status History (SHZ) datasets. These datasets encompass detailed information on employment history, migration and asylum procedures, as well as the residential locations of asylum seekers who arrived in Germany between 2014 and 2019. Our preliminary findings reveal negative effects on spatial mobility among asylum seekers subject to the residency requirement, impacting their probability of employment and wage levels. However, the magnitude of these effects varies significantly based on the initial economic context.