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Why Do People Migrate? Part 1: Facts

06 Feb 2017, 06:04 PM
Chapters 3 › Unit 3: SCROLL DOWN FOR INSTRUCTIONS View instructions Hide instructions

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This article from The Economist puts the finger on the painful question of the "economic cost" of hosting refugees.
Read the article and comment on the European experiences in this respect in your journal.
You can also comment on what others have done in their own journals!

The economic cost of hosting refugees

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For the developing countries of the West, from an economic perspective, the fear of migrants and refugees is centered primarily on two things: (1) the influx of cheap labor will drive down wages, and (2) the influx of people who will be using social services and will need government spending to process and manage will drive up government spending and strain national budgets.

In the case of Germany, by far the western european country that has taken in the greatest number of refugees, the evidence so mixed on the two points.

With regards to wages, evidence suggest that immigration has little impact on employment figures or wages.

With regard to the fiscal impact of migration, it is much more difficult to asses their economic impact, though an OECD assessment of member countries from 2007-2009 found a 0.35% net positive contribution by immigrants to national GDP on average.

On the other hand. the picture, with regard to fiscal impact, looks less bright when one parses the migrant group to look at the impact of refugees on public spending. Studies in Europe and Australia, for example, show that refugees take about 15-20 years before they contribute more in taxes to their host countries than they take in public spending through social support.

This net negative, however, does not seem to be such a high figure, at least in the case of the EU, where the IMF estimates the cost of hosting refugees only adds 0.19% of GDP to public spending.

In order to turn these numbers positive more quickly, countries need to put in place policies that help integrate, train, and get refugees into the workforce as quickly as possible.

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