HOCHBERG: Looking At Refugee Economics
By The Numbers

Politicians, students and the media have been sparring on how responsible Europe and the United States are for sheltering Middle Eastern refugees. But what if they are ignoring a fundamental question: how long should these refugees be allowed to stay? The simple answer from an economic standpoint: as long as possible.

Currently, a refugee’s options vary by country. Within the United States, these persons typically receive six months of aid and then, after another six months, they are allowed to apply for permanent citizenship. This permanence benefits both the original and host countries in terms of improving general economic stability and aggregate production capacity.

Experience and research indicate that immigrants have plenty of opportunities for financial success and improvement within their new countries. In just one example, a widely published 2014 University of Oxford study dispelled many of the stereotypes surrounding refugees, like the myth that they are a drag on the national economy. Many refugees build successful businesses, while others find both skilled and unskilled employment opportunities. Those who are more educated often contribute greatly to science and technology research and innovation. More unskilled workers find work in the agriculture or hospitality industries — jobs that many other citizens may not want to hold. In the case of long-term refugee settlement, there is no reason that these same trends of establishment and success should not apply.

Refugees that remain in a host country indefinitely continue to contribute to that county’s gross domestic product. Often, in lieu of returning home, these former refugees will send money to loved ones who are struggling. This influx of cash into the struggling country’s economy boosts consumption and overall well-being, accounting for more than 10 percent of GDP in 24 countries in 2011, according to the Migration Policy Institute.

The process of sending money home is a classic example of a factor payment from abroad. Essentially, the money sent home is income paid to a domestic factor of production (the refugee) by the rest of the world (the host country). These factor payments flow directly into the economy of the struggling nation, thereby directly increasing GDP, a measure of economic well-being that directly accounts for factor payments from abroad.

If these once-displaced individuals can choose to return home, they likely will be in a better financial position than if they had stayed in their unstable home country. They can use any new wealth they have garnered to start a new business or purchase goods and services, thereby jump-starting both production and consumption in their homelands.

Given that host countries benefit from offering refugees a home indefinitely, their practical policy options are both vast and complex. One possibility is extending the length of available visas. Typically, residency is granted anywhere from a few months to a few years, depending on the type of visa. However, making refugee visas readily available in long-term increments of five, 10 or 20 years would increase the stability and financial potential of refugees.

Governments can also increase their citizenship quotas. Once again, the ability to apply for and likelihood of attaining citizenship varies by country. In the United States, for example, refugees must reside in the country for at least a year before applying for citizenship.

While an international emergency like the current refugee crisis can provoke panic and spur short-term fixes, it is important to think about the long run. By allowing refugees to reside in their host countries for long periods of time, we are enabling every nation and every individual the best chance for economic success.

Gracie Hochberg is a sophomore in the College. By The Numbers appears every Friday.

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One Comment

  1. Ms Hochberg’s column should be sent to the scrabbling politicians defying each other to get closer to the White House: imagine The Donald responding to a list of reasons to accept immigrants rather than cursing them. Enough said.

    I have yet to read equivalent reasons in any major news newspaper, on any TV news program or on any radio program offering descriptions of the nasty race to power.

    Ms Hochberg, do it again. And again. (And thanks to The Hoya.)

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