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Why Do People Migrate? Part 1: Facts

Refugees: the economic consequences

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Much is made of the adverse effect refugees will have on the economy of the country they come to. Specifically, it is feared that their arrival will result in lower wages, because they will compete for jobs; and that they will be a drain on the benefits system.

Research has indicated that the first point is not a significant issue. One paper, for example, found that a 10% rise in the proportion of immigrants working in low paid jobs resulted in only a 2% drop in wages. This can even have a beneficial effect as native workers move up the job ladder and obtain higher paid work.

The second point is more significant, at least in the short term. Immigrants in the past have been found to make a nett contribution to the public purse. However, refugees are less likely to be employed and so more likely to be in receipt of benefits. That said, it will not have a huge impact; the IMF estimates that refugees will add 0.19% of GDP to public expenditure. And in the long run, as refugees integrate into the workforce, they are likely to increase annual output by 0.1%.

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