Limited time or secure residence? : a study on the short-term effects of temporary and permanent residence permits on labour market participation

In this study we exploit a sudden policy change implemented in Sweden in order to evaluate the effects of permanent residency on labour market participation. In short, the policy change implied that Syrians were granted permanent instead of temporary residency as before the new regulations. Using detailed Swedish registry data, we examine the effect of the introduction of permanent residency on three measures of labour market inclusion in the short-term. We analyse the data through a simple difference-in-means as well as through comparison to groups unaffected by the policy in a difference-in-differences design and a synthetic control group approach. Our conclusions are twofold. On the one hand, we conclude that temporary residents that are subject to a relatively less-inclusive situation earn more and are unemployed less. However, at the same time, they are less likely to spend time in education than are those with permanent residency.