Does exposure to mass migration affect the attitudes and economic behavior of natives in the transit countries? In order to answer this question, we use a unique locality-level panel from the 2010 and 2016 rounds of the Life in Transition Survey and data on the main land routes taken by migrants in 18 European countries during the refugee crisis in 2015. To capture the exogenous variation in natives’ exposure to transit migration, we construct an instrument that is based on each locality’s distance to the optimal routes that minimize travelling time between refugees’ main origins and destinations. We find that the entrepreneurial activity of native population falls considerably in localities that are more exposed to mass transit migration, compared to those located farther away. We explore potential mechanisms and find that exposure to mass transit migration results in the lower confidence in government, higher perceived political instability, and lower willingness to take risks. We also document an increase in the anti-migrant sentiment while attitudes towards other minorities remain unchanged.
Joint work with Nicolás Ajzenman and Cevat Giray Aksoy
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