Language Roulette – The Effect of Random Placement on Refugees' Labour Market Integration Working Paper #11

The labour market integration of refugees represents a key challenge for policy makers and has emerged as one of the most divisive topics in public debate. European countries have been pressured to establish fair and transparent methods of placing asylum seekers among the European states and into different regions within their national borders. In this paper, I highlight the unsurprising yet unintended consequences of following the most neutral placement mechanism: random assignment. The natural experiment of placing refugees randomly across different language regions in Switzerland results in substantially higher probabilities of finding employment when asylum seekers are placed in regions with a lingua franca that matches their individual language skills than when they are placed in regions speaking unfamiliar languages. Additionally, the findings suggest that language course participation can offset the reduced likelihood of employment in cases of a language mismatch. While random placement of refugees may be desirable for political reasons, it is detrimental to the economic integration process of these immigrants. Due to its strong subnational entities and clearly defined borders of language regions, Switzerland can function as a laboratory for European policy. This study also provides new empirical evidence for a positive and significant language proficiency effect.