Refugee Hiring and Organizational Performance

Grazia D. Santangelo*, Vera Rocha, Wolfgang Sofka

*Corresponding author for this work

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Abstract

Prior research on the performance effects of hiring immigrants has mainly considered people who choose to move to other countries. We shift attention to forced migrants (i.e., refugees) and study the relationship between their employment and firm performance. We focus on the specific labor market conditions that refugees face and theorize that performance improves among firms that hire refugees. We explain this relationship using two interconnected mechanisms that revolve around refugees’ limited outside options. First, as refugees have strong incentives to remain employed, they put extensive effort into their jobs, work long hours, and, thereby, reduce the employer’s labor costs related to worker turnover (effort mechanism). Second, as refugees are generally willing to accept low pay, hiring them reduces the employer’s labor costs related to salaries (remuneration mechanism). Moreover, we theorize that greater job insecurity at the hiring firm strengthens both mechanisms because it increases refugees’ perceived risk of being fired and their fear of being unemployed. We find support for our theoretical predictions in a matched sample of 27,782 firms in Denmark covering the period from 2001 to 2016.
Original languageEnglish
JournalOrganization Science
Number of pages23
ISSN1047-7039
DOIs
Publication statusPublished - 23 Feb 2024

Bibliographical note

Epub ahead of print. Published online: 23 Feb 2024.

Keywords

  • Refugees
  • Labor market
  • Firm performance

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