The Impact of Refugees on Modern Western Economies

By October 5, 2015Blog

In this era of extreme political polarization, one issue appears to unite economists from across the ideological spectrum: immigration.  Both perception surveys and academic literature point to a tenuous consensus that immigration has a positive, if modest, impact on the host country’s economy. 

The economic rationale is that immigrants are filling a labor demand, thus bringing with them the benefits of a well-functioning market.  The decline of America’s illegal migrant population during the Great Recession reinforces the notion that migrants tend to respond to economic conditions rather than more cynical motivations

But what happens when migrants aren’t driven by market forces?  Millions of Syrians are fleeing their war-ravaged homeland, many for Europe, which is facing its largest refugee crisis since World War II.   Put another way, they are not following “help wanted” signs; they’re running for their lives. 

So what will be the long term economic effect of this violence-driven diaspora? 

In short, the jury is still out.  Some are cautiously optimistic, saying the influx can bridge the labor gap brought about by aging populations and low birthrates in countries like Germany.  Others feel the sudden influx of many low- and unskilled workers will drive up poverty and crime, especially in sleepy hamlets turned host communities. 

Either way, these tragic events have created a unique opportunity: to study the impact of refugees on modern Western economies. One could argue that we have a moral obligation to conduct economic and demographic research to better understand the issue. Thus when the next refugee crisis emerges, we can rely on data-based policy instead of ideological entrenchment or emotional demagoguery.      




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