October 2016 Refugees and Economic Migrants: Facts, policies challenges Refugees and Economic Migrants: Facts, policies and challenges
Edited by Francesco Fasani
Centre for Economic Policy Research 33 Great Sutton Street A VoxEU.org Book London EC1V 0DX CEPR Press Tel: +44 (0)20 7183 8801 Email: [email protected] www.cepr.org CEPR Press
Refugees and Economic Migrants Facts, policies, and challenges CEPR Press Centre for Economic Policy Research 33 Great Sutton Street London, EC1V 0DX UK Tel: +44 (0)20 7183 8801 Email: [email protected] Web: www.cepr.org
Copyright © CEPR Press, October 2016. Refugees and Economic Migrants Facts, policies, and challenges
Edited by Francesco Fasani
A VoxEU.org eBook October 2016 Centre for Economic Policy Research (CEPR) The Centre for Economic Policy Research (CEPR) is a network of over 1,000 research economists based mostly in European universities. The Centre’s goal is twofold: to promote world-class research, and to get the policy-relevant results into the hands of key decision- makers. CEPR’s guiding principle is ‘Research excellence with policy relevance’. A registered charity since it was founded in 1983, CEPR is independent of all public and private interest groups. It takes no institutional stand on economic policy matters and its core funding comes from its Institutional Members and sales of publications. Because it draws on such a large network of researchers, its output reflects a broad spectrum of individual viewpoints as well as perspectives drawn from civil society. CEPR research may include views on policy, but the Trustees of the Centre do not give prior review to its publications. The opinions expressed in this report are those of the authors and not those of CEPR. Chair of the Board Sir Charlie Bean Founder and Honorary President Richard Portes President Richard Baldwin Research Director Kevin Hjortshøj O’Rourke Policy Director Charles Wyplosz Chief Executive Officer Tessa Ogden Contents
List of contributors vii
Foreword viii
Introduction 1 Francesco Fasani
Part I: Refugee migration
1 The migration crisis and refugee policy in Europe 15 Timothy J. Hatton
2 Efficient solidarity mechanisms in asylum policy 27 Jesús Fernández-Huertas Moraga
3 Labour market integration of refugees in Norway 37 Bernt Bratsberg, Oddbjørn Raaum, and Knut Røed
Part II: Economic migrants and their impact on hosting societies
4 Immigration and the UK: Reflections after Brexit 55 Marco Alfano, Christian Dustmann and Tommaso Frattini
5 Skilled immigrants: Economic contribution and policy implications 81 Francesc Ortega and Chad Sparber
6 The impact of immigration on health and health care: Evidence from the United Kingdom 99 Osea Giuntella, Catia Nicodemo and Carlos Vargas-Silva
7 Immigrants and crime 115 Paolo Pinotti
8 Education policy and migration 125 Lidia Farré and Ryuichi Tanaka Refugees and Economic Migrants: Facts, policies, and challenges
Part III: Migrants’ gains and global gains from migration
9 The short- and long-run returns to international migration: Evidence from a lottery 141 John Gibson, David McKenzie and Steven Stillman
10 The global costs from migration barriers 151 Frédéric Docquier
Part IV: Migration policy and politics
11 Is a points system the best immigration policy? 165 Jennifer Hunt
12 On the piecemeal approach to immigration enforcement: Evidence from the United States 177 Catalina Amuedo-Dorantes and Esther Arenas-Arroyo
13 Media exposure and international policymaking 191 Giovanni Facchini
14 A democratic dividend from emigration? 203 Hillel Rapoport
15 Does immigration affect election outcomes? Evidence from the United States 217 Anna Maria Mayda, Giovanni Peri and Walter Steingress
vi List of contributors
Marco Alfano, University of Strathclyde and CReAM Catalina Amuedo-Dorantes, San Diego State University Esther Arenas-Arroyo, Queen Mary University of London Bernt Bratsberg, Frisch Centre Frédéric Docquier, FNRS and IRES, Université Catholique de Louvain Christian Dustmann, UCL and CReAM Giovanni Facchini, University of Nottingham, Universita’ degli Studi di Milano and CEPR Lidia Farré, University of Barcelona and IAE-CSIC Francesco Fasani, Queen Mary University of London Jesús Fernández-Huertas Moraga, Universidad Carlos III de Madrid Tommaso Frattini, University of Milan, LdA and CReAM John Gibson, University of Waikato Osea Giuntella, University of Pittsburgh Timothy J. Hatton, University of Essex and CEPR Jennifer Hunt, Rutgers University and CEPR David McKenzie, World Bank Anna Maria Mayda, Georgetown University Catia Nicodemo, CHSEO, University of Oxford Francesc Ortega, Queens College, City University of New York Giovanni Peri, University of California, Davis Paolo Pinotti, Bocconi University Oddbjørn Raaum, Frisch Centre Hillel Rapoport, Paris School of Economics, University Paris 1 Panthéon-Sorbonne, European University Institute and CEPII Knut Røed, Frisch Centre Chad Sparber, Colgate University Walter Steingress, Banque de France Steven Stillman, Free University of Bozen Ryuichi Tanaka, The University of Tokyo Carlos Vargas-Silva, COMPAS, University of Oxford
vii Foreword
Civil war and political instability around the globe have driven levels of migration to historic highs. The role migration plays within the realms of politics and the media has always been one of great significance. As a social issue, immigration is often portrayed as causing great difficulty to recipient countries. In economic terms, however, immigration can be seen in an entirely different light. Having been a major issue in the Brexit referendum and one which is increasingly debated in many other European countries, it is essential to fully understand the true effects of migration within Europe. This would help to ensure that the economic aspects of future migration policy are properly thought through.
This new eBook summarises recent lessons learnt by economists regarding migration and migration policy. The authors examine the recent refugee crisis in Europe; discuss the impacts of immigration on labour, health, education, crime and elections in hosting societies; present evidence from major recipient countries such as the US, the UK, Norway, Spain and Italy, and address a host of other topics that highlight the key issues facing policymakers in this area. Empirical analysis of migration has only been undertaken in relatively recent years, and thus the results reported here are novel. It is important to disseminate this information as widely as possible, especially to policymakers as a tool to use in tackling these issues.
CEPR is grateful to Dr Francesco Fasani for taking the initiative to organise and edit this eBook. Our thanks also go to Simran Bola and Anil Shamdasani for the excellent and swift handling of its production. CEPR, which takes no institutional positions on economic policy matters, is delighted to provide a platform for an exchange of views on this crucially important topic.
Tessa Ogden Chief Executive Officer, CEPR October 2016
viii Introduction
Francesco Fasani Queen Mary University of London
The media and political attention that migration issues receive goes through cycles. From the point of view of European countries, we are currently going through the peak of a cycle. In the last few years, news stories about and images of the dramatic and perilous trips to – and through – Europe of refugees from Asia and Africa have become a constant feature of all major European media outlets. The political repercussions of hosting – or of refusing to host – refugees are regularly debated in several European countries, from the future of the German Chancellor Angela Merkel to the effects of the recent (failed) referendum on the EU refugee resettlement scheme promoted by the Hungarian Prime Minister Vicktor Orban. Immigration also took centre stage in the campaign that led to the vote for the ‘Brexit’ of the UK from the EU in June 2016. As a consequence, the future of EU immigrants in Britain (and of British citizens in the EU) is now arguably the main issue the new British Prime Minister Theresa May will have to address in her future negotiations with the EU. Further, terrorist attacks in France and Belgium perpetuated by second-generation immigrants triggered a harsh debate that questioned the very idea of integration of foreign nationals in hosting societies.
Immigration – and undocumented migration, in particular – is an extremely divisive issue in the US political debate. The Obama administration is coming to an end without having delivered an immigration reform or a solution to the estimated 11 million undocumented immigrants who currently reside in the US. President Obama’s plan to spare an estimated 4 million unauthorised immigrants – parents of citizens or of lawful permanent residents – from the risk of deportation and to grant them work permits was recently blocked by the Supreme Court. In the meantime, the Republican candidate for presidency, Donald Trump, proposed a radical solution: the mass deportation of all
1 Refugees and Economic Migrants: Facts, policies and challenges
immigrants residing unlawfully in the US and the construction of a wall along the US- Mexican border that would allegedly stem any future inflow (and that would be paid for by the Mexican government).
Two concurring factors have arguably contributed to bringing migration to the centre of public attention. First, the aftermath of the Great Recession, with weaker economic prospects and generalised cuts to public spending, led voters to question progressively more the legitimacy of foreign nationals’ presence in their countries. Fears of potential competition for access to the labour market and to the welfare state naturally intensify when opportunities shrink, especially when some politicians actively work to exaggerate such concerns. The second element has been the ongoing refugee crisis. The number of people that have arrived in Europe in the last few years to seek asylum having fled conflicts and oppression in Asia and Africa has reached a level that has not been experienced since the mid-1990s. It is up for debate whether a cohesive and solid EU would face serious constraints in effectively welcoming and integrating such an inflow of refugees. It is clear, however, that the European institutions – already weakened by the difficulties in producing a coordinated response to the Great Recession – are struggling and are revealing all of their fragilities. While member countries are engaging in autonomous and uncoordinated responses, concern and hostile feelings seem to be on the rise among the general public.
Economic migrants and refugees in Europe
To what extent does the relevance of immigration in the political debate reflect actual flows of foreign citizens to Europe? How sizeable is this phenomenon for European countries? We summarise the recent immigration experience in Europe in Figure 1, in which we combine OECD estimates on annual inflows of foreign nationals to EU countries, Norway and Switzerland (‘EU+NOR+CHE’) with records from the UN High Commissioner for Refugees (UNHCR) on asylum applications and Eurostat data on the average unemployment rate in the EU.
Sustained inflows of foreign nationals (blue line in the graph) were recorded in all European countries in the 2000s. The total annual inflow of immigrants steadily increased from about 2 to 3.5 million between 2000 and 2007. This upward trend was
2 Introduction Francesco Fasani
reversed in the following two years – new entrants dropped to 2.8 million in 2009 and then stabilised at around 3 million per year until 2013. The inflow then reached 3.5 million again in 2014, the last year for which the data are available. Note that all these figures include both inflows from non-EU countries and movements of EU citizens from one EU country to another. As expected from economic migrants, fluctuations in the arrivals of foreign workers closely followed the economic cycle of European economies. The average EU unemployment rate over the period is displayed by the dashed line in Figure 1. Increasing inflows of immigrant workers were recorded in years of declining unemployment rates in European countries – between 2000 and 2008, the average unemployment rate in the area dropped by more than 20%, decreasing from 9% to 7%. The arrival of the Great Recession, however, increased the number of unemployed workers in all European countries, pushing the average unemployment rate towards a peak of almost 11% in 2013. Inflows of migrants declined in response to the worsening of economic opportunities in Europe. Economic recovery finally lowered the average unemployment rate to 9.4% in 2015, and the annual intake of immigrants started increasing again. The fact that most of the substantial immigration to Europe in the 2000s occurred in times of economic expansion, combined with the responsiveness of migrants inflows to the economic downturn of the Great Recession, may explain why most EU countries managed to accommodate large foreign populations without generating major political discontent among voters.
Inflows of asylum seekers to Europe are illustrated by the red line in Figure 1. The number of asylum applications filed in European countries remained fairly flat at around 200-300,000 individuals per year for most of the period, showing no visible response to the onset and spread of the economic crisis across European economies. The numbers started growing only in 2013, when UNHCR recorded 360,000 asylum applications submitted in EU+NOR+CHE countries. In 2014 the figure was above 500,000, and in 2015 it reached more than 900,000 applications. The timing of this ‘refugee crisis’ was determined by dramatic political events that took place outside Europe, and were unrelated to the 2007-2008 financial crisis and the ensuing recession. This timing was truly unfortunate for the victims of displacement, whose arrival in Europe was met with political disagreement at the EU level and with opportunistic behaviour at the individual country level. The onset of a refugee crisis in the aftermath of dramatic economic recession – from which some European countries were still struggling to
3 Refugees and Economic Migrants: Facts, policies and challenges
recover – resulted in an immediate and pressing concern among policymakers and voters about the potential costs of welcoming the refugees. These national political concerns were magnified by the absence of a supranational, EU-level coordinated approach to the emergency and by the lack of an effective mechanism to allocate refugees across member countries and spread the economic burden of hosting them.
Figure 1 Inflow of foreign nationals, asylum seekers and unemployment rate in the EU, Norway and Switzerland, 2000-2015 4 12 3 9 2 6 i i 1 3 0 0 2000 2005 2010 2015