When Lives Are Put on Hold:Lengthy Asylum Processes Increase Unemployment Among Refugees

European governments are struggling with the biggest refugee crisis since the Second World War, but little evidence exists regarding how the manage- ment of the asylum process affects the subsequent integration of refugees who have been granted asylum. We provide the first causal evidence about how one central policy parameter, the length of time that refugees wait in limbo for a decision on their asylum claim, affects their subsequent economic integration. Exploiting exogenous variation in wait times and registry panel data covering all refugees who applied in Switzerland between 1994-2004, we find that one additional year of waiting reduces the subsequent employment rate by 4 to 5 percentage points, a 17% to 22% drop compared to the average rate. This deleterious effect is remarkably stable across different subgroups of refugees stratified by gender, origin, age at arrival, and assigned language region, a pattern consistent with the idea that wait- ing in limbo dampens refugee employment through psychological discouragement, rather then a skill atrophy mechanism. Overall our results suggest that marginally reducing the asylum waiting period can help unlock the economic potential of refugees by lowering unemployment among this vulnerable population.