This article investigates the long-term effects on immigrant earnings and employment of labour market conditions encountered upon arrival. We find that early earnings assimilation depends crucially on a favourable national labour market. Exposure to high local unemployment rates also affects individuals for at least ten years. To handle the issue of selective migration, we compare refugees entering Sweden during a severe and unexpected recession to refugees arriving during a preceding economic boom. The analysis of effects at the local level exploits a governmental refugee settlement policy to get exogenous variation in local labour market conditions. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.
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