Root Growing and Path Dependence in Location Choice: Evidence From Danish Refugee Placement

Does spending time in a location cause a person to stay there longer? We use a 1999 change in Danish refugee settlement policy to address this question. The policy change strongly encouraged refugees to stay in their assigned settlement municipality for at least three years. Using empirical designs for natural experiments, we find that treated refugees were more likely to be in their assigned location many years after their residence was granted. In a difference-in-differences specification, treated refugees were 4.8 percentage points more likely to remain in their first commuting zone 13 years later. A regression discontinuity design delivers a larger but less precise point estimate.