policy adopted by the Swedish government over 1985–1991 which placed refugees to initial hosting municipalities independent of individual characteristics. Using the Sweden Longitudinal Individual Data, the authors find substantive evidence of sorting across locations. Conditional on sorting, they find that less skilled migrants benefit from living in enclaves. An increase of one standard deviation in ethnic concentration results in a 13 percent increase in earnings. A second important result is related to the quality of the enclave. According to their findings, high-income ethnic groups gain more when living in enclaves compared to low-income ethnic groups.

Using a similar methodology, Damm (2009) analyzes the effects of the ethnic enclave size on labor market outcomes of migrants in Denmark. The identification strategy relies on the spatial dispersal policy adopted by the Danish government over 1986–1998, which consisted of a random allocation of refugees across locations. The dataset is extracted from the administrative records for migrants in Denmark between 1984 and 2000. The author documents strong evidence of self-selection into ethnic enclaves of refugees with unfavorable unobserved characteristics. Compared to Edin et al. (2003), Damm (2009) finds that one standard deviation increase in the size of the enclave results in a 18 percent increase in earnings, but regardless of the skills level. Furthermore, the author documents that ethnic networks disseminate job information, which translates into higher hourly earnings due to better matching.

Murard (2021) studies the long-term effects of the mass refugee inflow into Greece after the GreekTurkish war of 1919-1922. The author combines different census and survey data from various source with information at different levels of geographic aggregation. The results show higher inter-generational mobility among refugees than natives, as shown by the “catching-up” of second-generation refugees, who currently have levels of educational attainment, occupations and income similar to natives. The empirical findings related to the effects on the social cohesion of the host communities, with the analysis of indicators such as refugees’ political values, trust and civic engagement, suggest that a larger concentration of refugees in co-ethnic enclaves can lead to lower levels of social cohesion in the long run.

Martén et al. (2019) make use of the random assignment policy of refugees across Swiss cantons to investigate the causal effects of ethnic clusters on economic and social integration. The authors rely on the registry data from the State Secretariat of Migration that covers the universe of asylum seekers, combined with rich administrative data from the registry for all migrants living in Switzerland. They examine refugees who obtained subsidiary protection over 2008–2013. The authors find that larger local ethnic networks of refugees predict higher employment probabilities compared to refugees assigned to smaller ethnic communities. These effects are largest within the first three years since arrival and then they fade afterwards. These findings are consistent with the theory that larger networks of co-ethnics facilitate information transmission and better matching.

On the other hand, Battisti et al. (2021) find mixed evidence. They examine the role of co-ethnic networks in Germany over 2013–2015. Their identification strategy relies, as in previous studies, on the quasi-random allocation of refugees (and ethnic Germans) across locations. The authors use rich German social security data matched to migration survey data, which allow controlling for a large set of fixed effects and individual characteristics. They find that the larger initial ethnic networks are associated with higher employment probabilities for low and medium-level educated refugees in the first three years since arrival. However, in the long-run the effect dissipates and these refugees no longer have an advantage over those with smaller co-ethnic networks. The underlying mechanism they suggest is the lower incentives to invest in human capital among those with a larger initial network.

Another aspect related to initial conditions, which has been understudied, is the role of local attitudes towards refugees. The two existing studies, both focusing on Germany, have used self-reported measures of attitudes extracted from existing surveys, and they have examined the role of general attitudes towards migrants, and used it as a proxy for attitudes towards refugees. Aksoy et al. (2020) measure attitudes with cross-sectional state-level data from the European Social Survey. They find that positive attitudes towards migrants at the time of arrival, have a positive effect on refugees’ economic 8