Economist on facing the refugee crisis

There are more than 60 million refugees worldwide, more than ever since World War II. But what does this mean for the countries that welcome them, and their economies?

To get a deeper understanding we spoke with Timothy Hatton who is a professor of economics at the University of Essex and the author of a number of studies on refugees.

ResearchGate: In the light of this humanitarian crisis, do you think it is acceptable to speak about refugees as a part of their destination country’s economy? If so, why – if not, why? 

Timothy Hatton: Refugees are in most respects like other immigrants. It is widely recognized that immigrants gradually assimilate into the host country economy. They start at a disadvantage and so tend to have lower employment rates than non-immigrants, and they are often in lower level jobs than their skills and qualifications would predict. But they gradually assimilate. Refugees often start with even greater disadvantages and assimilate more slowly. There is a reason for this: they are people who would probably not have chosen to migrate and often have been traumatized. They have been pushed rather than pulled and so they may be less well matched to the host country labor market.

RG: Because of Germany’s aging population and low numbers of children there seem to be high hopes to make refugees part of their workforce. What do you make of this? Can you tell me of historic examples where refugees have boosted an economy?

Hatton: Germany welcomed guest workers up to the early 1970s and there are some parallels with that experience. But, for reasons noted above, it will take longer for them to have the same high employment rates. So in terms of the labor force the contribution would not be so great, but it is likely to increase with the second generation. One example in recent history is the Soviet Jews who went to Israel in 1990-2. They added about 12 percent to the population. Many suffered disadvantage (not least because of lack of Hebrew). It was a major labor supply shock, it drove wages down in the short run, but within a decade the Israeli economy had adjusted.

RG: Asylum policies around Europe have been getting progressively tougher since the 1990s. What consequences does this have for the current migrant crisis facing Europe? In your opinion, which country’s policies are best suited for refugees? And what does that mean?

Hatton: Policies have been getting tougher. In comparison with the era up to and including the Vietnam War, host countries are now less open to accepting refugees. Most people in Europe have compassion towards genuine refugees. But the term 'asylum seeker' has become conflated with 'illegal immigrant' and 'economic migrant'. As a result some countries are reluctant to share the burden, preferring to leave it to others (such as Germany).

In the present crisis we need to do three things. First increase total capacity by establishing a distribution key that will resettle refugees across Europe. Second, gain public confidence by tightening the borders so that those who do get in are genuine refugees, and the incentives for others are reduced. Third, expand and develop capacity in locations close to the source of refugees; and then make a serious effort to resettle those that do qualify as genuine refugees. 

RG: What do you mean by your third point when you say that we should develop capacities close to the source of refugees?

Hatton: The alternative is to take refugees from UNHCR refugee camps rather than running a lottery to see who can brave the high seas and then get through the (physical, legal and administrative) fence. A number of countries participate in resettlement schemes, but only for relatively small numbers. So there needs to be a major expansion of resettlement programmes. In addition, more financial support needs to be given, either through the UNHCR (which is now virtually bankrupt), or by providing resources more directly to establish facilities where displaced people can be accommodated, safe from persecution, and where their refugee status can be determined.

RG: What do you think are effective ways to assure that refugees are actually refugees? Why do states need to care about that? What do you think of Hungary’s wall in this regard?

Hatton: Who is a refugee is decided in the refugee status determination procedure, which applies the criterion laid down in the 1950 Refugee Convention, namely that the applicant has a "well founded fear of persecution". Of all those that apply to European countries about two thirds are rejected on these grounds (although that number has diminished in the last couple of years). Applicants that do not qualify for this or some other form of visa are then ordered to leave the country. The concern in recent years is that many people who have entered (often illegally) and have failed to gain asylum nevertheless remain as illegal immigrants in the clandestine economy. The EU's FRONTEX system attempts to minimize illegal entry; Hungary's fence is an attempt to reinforce these efforts. But of course that is likely to screen out genuine refugees as well as "economic migrants".

RG: Many of the countries that host the most refugees – like Pakistan, Lebanon, Iran, Ethiopia and Jordan – struggle politically and economically themselves. What impact do refugees have on these countries in the short and long term? How does this differ from rich popular destination countries?

Hatton: Refugees displaced into poor neighboring countries often suffer discrimination and disadvantage but it is difficult to generalize. Poor countries have greater challenges in absorbing them, not least because of the large numbers and the lack of adequate infrastructure. So we see large enclaves of refugees that often remain distinct and separate for generations and are not quickly absorbed by the host states.

A Syrian refugee mother living in Amman, Jordan, shows the wounds on the face of her young daughter after she was hit by a neighbour. /UNHCR/O.Laban-Mattei/June 2013
A Syrian refugee mother living in Amman, Jordan, shows the wounds on the face of her young daughter after she was hit by a neighbor. 

RG: Do you have a historic example what a situation like this can lead to? How could it be alleviated?

Hatton: We have seen this in the displacement of Rwandans into the eastern DRC, Somalis into northern Kenya, Darfuris into Chad, and presently Syrians into the north of Lebanon. They often reside in refugee camps that become impoverished and isolated communities. Some drift into towns and cities becoming communities of fringe dwellers. Sometimes they gradually become assimilated, and some move on to seek asylum elsewhere. But the main factor that alleviates these situations is when it becomes safe enough to return.   

RG: You wrote a few years back that while most people think “Third World” emigration pressure was on the rise, projections showed that it may actually decline. What do you think now? How do you think emigration will develop in the next 10, 50, 100 years? How do you think this will change people’s lives and livelihoods?

Hatton: That was related to regular migration, not refugees. It was based on predictions of economic and demographic change. It did not anticipate major refugee crises like the current one. But one implication is this. As those fleeing persecution create a diaspora, that will act in the future as a pull factor for further migration from source countries. One of the main factors in migration is the importance of earlier migrants in creating a cumulative flow of subsequent migration from the same source country. So our predictions for migration from the Middle East will probably be too low.

Image courtesy of Photo Unit &  United Nations Photo