Refugee-Specific Government Aid, Institutional Embeddedness and Child Refugees’ Economic Success Later in Life: Evidence from Post-WWII GDR Refugees

We exploit a unique historical setting to investigate how refugee-specific government aid affects the medium-term outcomes of refugees who migrate as children and young adults. German Democratic Republic (GDR) refugees who escaped to West Germany between 1946 and 1961 who were acknowledged to be “political refugees” were eligible for refugee-targeted aid, but only after 1953. We combine several approaches to address identification issues resulting from the fact that refugees eligible for aid are both self-selected and screened by local authorities. We find positive effects of aid-eligibility on educational attainment, job quality and income among the refugees who migrated as young adults (aged 15-24). We do not find similar effects of aid-eligibility for refugees who migrated as children (aged 1-14). The overall results suggest that factors coming from the refugee experience per se do not impact negatively on the later-in-life socio-economic success of refugees. The often-found negative effects in various measures of integration in other refugee episodes are therefore likely driven by confounding factors that our unique historical setting allows mitigates.