Were they a shock or an opportunity?: The heterogeneous impacts of the 9/11 attacks on refugees as job seekers—a nonlinear multi-level approach

Abstract

This study investigates whether the September 11 terrorist attacks had any impacts on the labor market outcomes of refugees resettled in the United States, who should be distinguished from economic migrants or usual nonnatives. Furthermore, this paper sheds unprecedented light on whether those impacts were heterogeneous depending on a refugee’s ethnicity or religion. In terms of econometric methods, this research attempts to allow for the violation of the conventional condition of independently and identically distributed (i.i.d.) observations and control for cluster-specific unobservables by using nonlinear multi-level models, considering that refugees form unique networks in their resettlement regions and actively interact with one another within their clusters. Due to the binary dependent variable of this study, the incidental parameters problem is also taken into account. The multi-level estimates of this paper suggest that the September 11 attacks did not uniformly shock all sub-populations of refugees: rather, they presented a unique, substantial opportunity for Asian refugees and a serious threat to African and Arab refugees. One unanticipated finding is that the employment probability of European refugees remained stable, whereas that of Asian refugees markedly increased after the attacks. However, in terms of employment quality, measured by real wages, European refugees were the only ones who benefited from the attacks. Possible explanations for such heterogeneous impacts and different patterns of benefits are discussed, including positive versus negative selection into employment.