The economic integration of forced migrants: Evidence from postwar Germany

Thomas Bauer, Sebastian Braun, Michael Kvasnicka, 24 February 2014

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In 2012 the number of displaced people reached the highest level in almost 20 years. More than 45 million people were forcefully displaced worldwide, including 15.4 million refugees and 28.8 million people displaced within the borders of their own countries. Despite these alarming figures, economic research on the effects of forced migration remains scarce. This is largely due to a lack of high-quality data (Ruiz and Vargas-Silva 2013).

Forced migrants in post-war Europe

Today’s forced migrants usually come from outside Europe, but during and after World War II, millions of Europeans were forcefully uprooted. In fact, the International Refugee Organisation (IRO), forerunner of today’s Office of the United Nations High Commissioner for Refugees (UNHCR), was initially founded to deal with the millions of Europeans that the war had displaced.

During the war, Nazi Germany forced millions of workers to labour for its war effort and deported millions of others to die in concentration camps. Likewise, the Soviet Union sent hundreds of thousands of individuals from annexed territories to the Gulag labour camps. The end of the war did not stop the displacements. Forced population transfers were used to increase ethnic homogeneity within the new borders that were drawn after the war (see, e.g., Ahonen et al. 2008). Only recently have economists started to analyse the effect of these mass displacements in Europe. These studies provide a long-term perspective on the effects of forced migration, as it is possible to observe outcomes of migrants long after the actual displacement took place.

Sarvimäki et al. (2009), for instance, study the long-term effects of the displacement of Finns from areas ceded to the Soviet Union in the aftermath of World War II. Surprisingly, the authors find a positive effect of displacement on the long-term income of male Finns who lived in rural areas before displacement. They argue that the displacement increased long-run income by accelerating migrants’ transition from traditional to modern occupations and from rural to urban areas.

The displacement of Germans from eastern Europe

In our recent paper, we analyse the effects of the displacement of ethnic Germans from central and eastern Europe to post-war Germany after World War II (Bauer et al. 2013). We find significant and mostly negative long-run economic consequences for the displaced. Even a quarter of a century after the war ended, forced migrants were still economically disadvantaged relative to native West Germans.

With at least 12 million Germans displaced, this displacement marks one of the largest forced population movements in modern history. The enormous inflow of forced migrants prompted a drastic increase in the West German population – from 39 million in 1939 to 48 million in 1950. By far the largest number came from Germany’s former eastern territories that had been lost after World War II. The integration of these displaced people into the war-ravaged West German economy is largely viewed to have been both swift and successful. Our paper shows that this positive view is not justified.

Integration of migrants and their children

In order to analyse the integration of forced migrants in post-war Germany, we compare 1971 economic outcomes of forced migrants and native West Germans who were comparable in their socio-economic characteristics before the war. We do so both for both the migrants themselves and their offspring.

We find that, on average, displaced men had 5.1% lower incomes than native men in 1971. Displaced women had 3.8% lower incomes than native women. The displaced also faced a higher unemployment risk and were much less likely to own a house than their native peers.

But displacement was far from uniform in its effects across migrants of different background. Most notably, we find a large positive income differential of more than 10% for male and female agricultural workers who had been displaced in the wake of World War II. This differential – and income differences more generally – can be explained by the massive changes in the occupational and sectoral employment structure of forced migrants that were induced by the displacement.

Displacement dramatically accelerated transitions out of low-paid agriculture: Figure 1 compares the agricultural employment share of male migrants born between 1910 and 1919 to that of native West Germans. Before their displacement, the migrants were significantly more likely to work in agriculture than natives. Yet, their employment share in agriculture more than halved between 1939 and 1950, and continued to decline thereafter. The agricultural employment share of natives, in contrast, remained almost constant between 1939 and 1950. Overall, displaced men and women had, respectively, a 68% and 78% lower probability of working in agriculture in 1971 than native men and women. Displacement also increased blue-collar employment, and reduced self-employment among migrants.

Figure 1. Employment share in agriculture, forced migrants and native West Germans born 1910-19

Source: German 1971 supplementary microcensus, own calculations.

The economic consequences of the displacement were not confined to the first generation of forced migrants but were still felt by their offspring. In 1971, the male offspring of the forced migrants had 5.6% lower incomes than their native West German peers. Moreover, differences in the sectoral and occupational structure of forced migrants and natives largely carried over to migrant children – although they tend to become smaller over time.
We also find that migrant children tend to acquire more education than their native peers. This finding may be explained by the fact that the loss of family wealth, businesses and farms forced the children of migrants to compete on the wider labour market, and in particular to look for work outside agriculture. As a consequence, formal education became more important for economic success.

Conclusion

Overall, the results suggest that displacement had mostly negative long-run economic consequences for the displaced. Language deficiencies or potentially negative self-selection of low-productivity migrants cannot explain these findings, nor can adverse macroeconomic conditions in the destination region; for most of the 1950s and 1960s, aggregate economic conditions in West Germany were favourable. Moreover, Germany invested considerable resources into the integration of migrants. Expenditures far exceeded those usually encountered nowadays in developing countries, which host most of today's forced migrants.

References

Ahonen, Pertti, Gustavo Corni, Jerzy Kochanowski, Rainer Schulze, Tamás Stark, and Barbara Stelzl-Marx (2008), People on the Move: Forced Population Movements in Europe in the Second World War and its Aftermath, Oxford: Berg Publishers.

Bauer, Thomas, Sebastian Braun, and Michael Kvasnicka (2013) “The Economic Integration of Forced Migrants. Evidence for Post-war Germany,” The Economic Journal 123, no. 571: 998-1024.

Ruiz, Isabel, and Carlos Vargas-Silva (2013), “The Economics of Forced Migration,” The Journal of Development Studies 49, no. 6: 772-784.

Sarvimäki, Matti, Roope Uusitalo, and Markus Roope (2009), “Long-Term Effects of Forced Migration,” IZA Discussion Papers 4003.

UNHCR. Global Trends 2012. Geneva: UNHCR, 2013.

Topics: Europe's nations and regions, Migration
Tags: forced migration, refugees

Professor of Economics, University of Bochum

Senior Researcher, Kiel Institute for the World Economy

Professor in Economics, Otto-von-Guericke-University Magdeburg