“Allowing more immigration of refugees would be good for the refugees and the economies they enter” Discuss.

“Allowing more immigration of refugees would be good for the refugees and the economies they enter” Discuss.

imageImmigration is the action of multiple citizens moving to a foreign country for a long period of time. Refugees are a type of immigrant that are forced to migrate/ desperately escape due to push factors, for example being left without a home because of a bombing in their country.
Fundamentally I believe that immigration should be taken as a moral issue, because refugees should be treated as people instead of being reduced to just numbers on our televisions. As written in The Economist, “Humanity dictates that the rich world admits refugees, irrespective of the economic impact” but this has been proven more complex when brought to reality. The world has seen the levels of refugee immigration rise exponentially ever since the violence in Syria began in March 2011. Ever since, the middle eastern has been crippled by a brutal civil war which has caused more than four million people to have fled Syria to neighbouring countries (over half of them are children, says the UN Refugee Agency). The graph to the right shows where the helpless Syrians, and refugees from other corrupt countries have travelled to in Europe. It shows distribution of asylum claims in 2015 – applying to stay as refugees because they fear persecution in your own country.
From a purely economic stance, it makes sense that the more successful economies are able to provide the best aid and ultimately a more financially stable lifestyle for the refugees. But, even the most liberal of us must admit – it isn’t that simple. As illustrated by recent global events, a lot of other factors must be taken into consideration. These include distance away from the country of origin, the dominant political power of the recipient country, population density and how easily the country can handle a large influx of people. So, for ease of discussion, we should assume the recipient country is accessibility and holds the spare capacity to accept more refugees.
Using simple economic ideology, we would think less of refugees being liabilities and more as an influx of workers. Following this, more refugees would allow a rightward shift in a short run supply curve as the capacity for producing more goods to consumers grows with the number of workers in the labour force. Given that the majority of these refugees entering a country would be of a younger age, this would make the country’s workforce younger; therefore, reducing the dependency ratio and putting less strain on retirement funds. On the other hand, even if these refugees did not have the intention to work, they would still benefit the demand side of the economy by expanding the consumer market for firms. As with any influx of workers or capital, the hosting country will benefit from long term economic growth (illustrated on the below diagram). This improved productive capacity is brought about by the expansion of workforce and inevitably,image the innovation and new ideas they bring from their country of origin. However, if the refugees are entering an economy which is not performing on their trend rate of growth, this influx is likely to just make matters worse as they are dragged further away from full employment. So, this effect is heavily dependent on the current state of the host country.
There is a common misconception which claims that as the labour supply of migrants enter an economy, wage levels are forced downwards. I would say that wage effects are much dependent on the skills of the immigrants, because often, it is the most skilled refugees that migrate to find jobs. Added to this, foreign workers actually tend to be more qualified than, for example, the current UK population, and often trained to be more efficient. Therefore, this would actually lower costs of production and drive price level downwards – the opposite to the misconception. However, many migrants tend towards more menial jobs in the lowest band of income – due to low confidence, language barriers and cultural differences. So, in this case, average wages could be lowered but this would not be likely to continue for a long period of time. Another false claim against refugees and allowing them into our country is that they are ‘taking our jobs’. This is believed under the ‘lump of labour fallacy’, which is the contention that the amount of work available to labourers is fixed and this is simply not true. More refugees and potential workers flooding into an economy definitely will increase economic activity as spending increases. Also, in an experiment Mette Foged and Giovanni Peri studied refugees arriving in Denmark between 1991 and 2008, and observed that they did take the less educated citizens out of the lowest band of jobs. However, rather than sinking into unemployment, these displaced natives upgraded to jobs that involved less physical labour, sometimes with higher-paying salaries. So, instead of taking away jobs, they add to those which previously wouldn’t have existed.
Of course, it would be unrealistic to claim that more refugees can only be good for an economy – because with more people, obviously comes worse drawbacks. The highest concentration of refugees actually tends to be in the LDCs (least developed countries) and so the presence of refugees compounds the already prevailing economic, environmental, social and, at times, political difficulties in these countries. As more desperate people cross the border, they are likely to be exhausted and stop in large groups for safety. With this comes diseases spreading faster, as the refugees are likely to not possess the means of medicine or safe hygiene – meaning they fall ill upon arrival. This type of negative impact would hit developing host countries harder as they may not have the knowledge or resources for treatment, so the illness get worse; therefore, temporarily dropping the work force. This unfortunate domino effect would then strain on health resources, housing services and infrastructure – just adding to the extreme hardship already hitting countries such as in Nepal, in the district of Jhapa, where 90,000 refugees represent over 13 per cent of the local population.
Because the short term aid would be finite and scarce, refugees would be later forced to accommodate for themselves with limited funds. Purchasing large quantities of construction material may make them scarce or even unobtainable for local people, while consequently causing demand-pull inflationary pressures. Likewise, increased demand for food and other commodities can lead to price rises in the world market which will stimulate local economic activity, but unfortunate not help the least wealthy band of society. These are added to the social costs of maintaining refugee camps; which all contribute towards lower standard of living for the original residents, in turn causing a less productive work force.
The effects of more refugees must be taken as a relative measure, perhaps numerically to GDP, to see how much damage they could potentially cause. Surprisingly, research done by the IMF showed that “in the very short run refugees will add around 0.19% of GDP to public expenditure in the European Union (0.35% in Germany) in 2016”. Given this is such a small percentage and over a small period of time, I think that refugee aid costs is not a sufficient reason to turn them away if the economy is of a reasonable size. So, over tie, the new arrivals should help to boost annual output and stop the ever-creeping pension costs of our ageing population. For this reason, I think leaders should avoid political myopia and fears of immediate costs and think more of the long term benefits our country can bring to their lives, whilst they gradually boost our economy in exchange.
As well as considering the effects on the recipient country, we must also think about if permanent displacement into another country is what the refugees may want. The question in hand uses the word “good” and for the purposes of answering it, we shall define this as “happy and a reasonable standard of living”. I think that the five measures of a standard of living are the occupation, personal life, education, housing and basic security/ safety – all of which depend on where they have been displaced.
imageThe personal problems usually experienced, however, are common in most of the countries they are likely to stay at – the first of these being social integration problems. Whether the refugees have travelled to a neighbouring country, or somewhere halfway across the globe, it is inevitable that they will come across unwelcoming natives that treat them as a burden. This social clash may spark violence or discriminatory issues, or generally make the helpless refugees unhappy. On the other hand, the refugees may arrive completely alone after losing family in the chaotic turmoil of their own country or along the exhausting travels. This wold definitely impact on their happiness and willingness to function in a society without any family or support network. Furthermore, they would also be leaving behind a job/ steady source of income which is difficult to replace in another country. This is what leaves so many refugees in medial jobs which they are over-qualified for. Of course, these type of jobs only provide the lowest band of income, probably not earning enough to maintain a reasonable standard of living and pay for proper housing. The negatives of fleeing for a refugee all come under the idea of loss: family, community, culture, home and job – and so if these categories make a lower standard of living, the refugee becomes a less productive worker in the eyes of economists.
As said at the beginning, the moral issue behind acceptance of refugees should be placed above any other; the exception is when the country does not hold the capacity to do so, or if the country’s economic and political state makes it hard for its own natives to live there already. Although fleeing makes the lives of the refugees more unstable and may bring fearful, immediate costs to the host country, these must be accepting in order to provide a happier future for the refugees as they help to grow the hosting economy too. Overall, I believe that those in unfortunately corrupt countries deserve as much of a life as those in privileged western countries like our own so more fortunate countries should unite to help refugees so more refugees over a long period of time is good for the host country and the individuals.
Word Count: 1,749

written by Rachel Stanley
Sources used:
http://www.bbc.co.uk/news/world-europe-34131911
https://www.theguardian.com/commentisfree/2016/may/14/observer-view-refugees-immigrants-europe-response
http://www.unhcr.org/uk/excom/standcom/3ae68d0e10/social-economic-impact-large-refugee-populations-host-developing-countries.html
http://www.economist.com/news/finance-and-economics/21688938-europes-new-arrivals-will-probably-dent-public-finances-not-wages-good-or
https://www.google.co.uk/search?q=negative+economic+effects+of+refugees&rlz=1C1CHWA_enGB600GB600&espv=2&biw=1366&bih=661&source=lnms&tbm=isch&sa=X&ved=0ahUKEwib4pK-o_POAhVnCMAKHcBjAj0Q_AUIBygC&dpr=1#tbm=isch&q=refugees+&imgrc=3PXaqiJN7XrIaM%3A

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