Challenges and successes in refugee integration
Refugee flows around the world have been on the rise in recent years. Yet, the welcome received by refugees has varied worldwide. Gaining a better understanding of the facts is essential in order to devise immigration policies that address native concerns and avoid the misrepresentation of the refugee phenomenon or political opportunism. Several recent IZA discussion papers provide solid economic analysis of different aspects and country experiences with refugee integration, offering useful insights for public and policy debates.
Crime and terrorism
In the United States, growing skepticism about refugees has resulted in expressed concerns regarding their impact on public safety and the possibility that they might bring with them the terror and crime that afflicts many of their countries of origin. IZA DP 11612 attempts to take a first step at assessing if there is empirical evidence supportive of such a link. The analysis, which exploits the geographic and temporal variation in the distribution of refugees across U.S. counties, reveals that, overall, refugees do not seem to have a significant impact on local crime rates. Similar results are obtained when the analysis is limited to refugees from the seven countries targeted by President Trump’s “Muslim ban.”
That refugee inflows are not associated with increases in crime rates seems plausible, the authors write. Refugees in the U.S. are carefully screened making it unlikely that individuals predisposed to criminal activity will pass the vetting process. Furthermore, refugees are matched to sponsoring agencies, which provide them with services to facilitate their integration into the job market. The local sponsoring agencies also likely monitor refugees, enabling them to detect and correct inappropriate behaviors early on. In sum, the findings of the study confirm the authors’ expectation that refugees – settled through these channels – are not more prone to crime than the native population.
Socioeconomic outcomes
As the current debate on the European refugee crisis shows, refugees are also often perceived as an economic “burden.” But there is little quantitative evidence on the medium-term outcomes of refugees. IZA DP 11609 aims to fill this gap for the UK by looking at the case of “East African Asians” – refugees of Indian ethnicity who were expelled from East African countries (primarily Uganda and Kenya) in the late 1960s and early 1970s. Using data from the UK Census, the authors show that the refugees’ outcomes forty years after arrival in Britain are at least as good as the population average, with the younger cohort performing even better. Refugee status, as distinct from ethnicity or immigrant status, appears to have a positive impact.
The authors make it clear that the external validity of this study for current refugees is limited since obviously each refugee group is unique in its source countries, its experiences and any assets (tangible and intangible) it brings. However, they also point at commonalities: All refugees have necessarily left their home country under duress, all have self-evidently made it through to a place of safety, and all have experienced (at the least) very difficult transitions. The study thus concludes that refugee integration is challenging, but it can be done – with enormous benefits, both economic and social, for the receiving country.
Language and educational attainment
Does it matter for socioeconomic outcomes how refugees are geographically distributed? In many countries, the persisting socioeconomic inequality between immigrants and natives is also attributed to ethnic enclaves that hinder integration into the host society. IZA DP 11608 analyzes whether a high regional concentration of immigrants of the same ethnicity affect immigrant children’s acquisition of host-country language skills and educational attainment. The authors exploit the exogenous placement of guest workers from five ethnicities across German regions during the 1960s and 1970s, which differed from today’s refugee situation in many respects but had similar implications for language acquisition.
The results indicate that exposure to a higher own-ethnic concentration impairs immigrant children’s host-country language proficiency and increases school dropout. A key mediating factor for this effect is parents’ lower speaking proficiency in the host-country language, whereas inter-ethnic contacts with natives and economic conditions do not play a role. Host-country language training for adult immigrants might thus have important positive spillover effects on their children.
These findings imply that even children of immigrants who are well integrated into the labor market may suffer from worse human capital outcomes – host-country language proficiency and educational attainment – when growing up in regions with many, mainly low-educated, immigrants of their own ethnicity. Concerning current policy debates about how to disperse refugees across regions, the findings suggest that avoiding the emergence of ethnic enclaves might help refugee children to learn the host-country language and to avoid school dropout.
Long-run prosperity
In contexts where language acquisition matters less, however, keeping homogenous communities of origin together may be beneficial for economic growth. IZA DP 11613 investigates the long-term consequences of mass refugee inflow on economic development by examining the effect of the first large-scale population resettlement in modern history. After the Greco-Turkish war of 1919–1922, 1.2 million Greek Orthodox were forcibly resettled from Turkey to Greece, increasing the Greek population by more than 20% within a few months.
Using a novel geocoded dataset, the authors find that localities with a greater share of refugees in 1923 (and similar initial levels of development) today have higher earnings, higher levels of household wealth, greater educational attainment, as well as larger financial and manufacturing sectors. The long-run beneficial effects appear to arise from agglomeration economies generated by the large increase in the workforce, occupational specialization, as well as by new industrial know-how brought by refugees, which fostered early industrialization and economic growth.
Despite the unique context in which this mass refugee inflow took place, the authors believe their findings may still be informative for current debates, particularly when assessing under which conditions immigrants and displaced refugees could have beneficial long-run impacts on economic growth. Their findings shed some light on the effectiveness of refugee resettlement policies in a context of a relatively poor agrarian economy, similar to contemporary Sub-Saharan Africa that currently hosts the largest number of forcibly displaced people.
At least three settlement policy features seemed to have played a major role: (i) refugee households were given houses, arable land, livestock, seeds and agricultural tools; (ii) there was a conscious effort to maintain the same homogenous communities of origin; (iii) all refugees were granted the Greek citizenship immediately upon arrival, which certainly facilitates their social and political integration.
The study was discussed on Vox’s The Weeds (starting at 42:35).
Housing and segregation
Recent refugee movements have been intensified especially after the Syrian crisis. Although the policy debate evolves around the potential impacts of refugees on the developed economies (given that the developed countries can avoid admitting a large number of them), some countries could not avoid admitting them and have already started to experience those impacts. Turkey is a major example. Since the beginning of 2012, more than 3 million Syrian refugees crossed the border and settled in Turkey, based on official figures.
This inflow has been affecting a wide range of economic and social outcomes from labor markets to voting behavior. IZA DP 11611 investigates the impact of Syrian refugee inflows on housing rents in the hosting regions in Turkey. Not surprisingly, housing rents have exhibited a significant increase following the influx. What is more interesting is that, contrary to previous findings, the increase mostly comes from high-quality units as natives who originally resided in the low-quality neighborhoods moved into high-quality neighborhoods and refugees substituted them. The demand for low-quality dwellings did not change significantly, but high-quality neighborhoods experienced a sharp surge in demand.
The authors argue that this result is likely generated by negative attitudes towards refugees. These seem to be driven mainly by the congested use of public goods and services, not so much by crime perceptions or labor market aspects. The results imply that the refugee-native conflict in economic and social life has implications for the city structure in the sense that it may lead to sharp segregation, which can further feed socio-economic inequality that can have lasting impacts on second- and third-generation refugees. Thus, the authors conclude that timely policies targeted at facilitating refugee integration and minimizing the extent of segregation would be useful and welfare-improving for the whole society.
15th IZA Annual Migration Meeting held at Harvard Kennedy School
Going into its 15th edition, this year’s IZA Annual Migration Meeting was hosted by the Harvard Kennedy School. Organized by Benjamin Elsner and George J. Borjas, the meeting brought together 20 researchers whose work covered a large variety of topics in international migration, such as the integration of refugees, the role of smugglers, the impact of migration on labor markets, or the impact of remittances on the sending communities.
Border deterrence
A highlight of this year’s meeting was the keynote by Gordon Hanson, who presented his latest work on the impact of sanctions against illegal immigrants at the U.S.-Mexican border. Since the mid-2000s, the U.S. Border Patrol has introduced tougher sanctions for migrants who were apprehended at the border, such as prompt deportations (the so-called Alien Transfer Exit Program) or mass sentencing in temporary courts. Hanson and his team estimate that these measures reduced the likelihood of a further apprehension by 8.5 percentage points relative to an initial rate of 26%. This suggests that the sanctions achieve their goal to reduce the number of illegal entries into the United States.
Migration costs
Research presented by Mariapia Mendola sheds light on the importance of migration barriers in the decision to migrate. Her co-authored work exploits the opening and closing of the Central Mediterranean Route from Libya to Italy and investigates its impact on the migration intentions of people in Sub-Saharan Africa. The opening of this route in 2011 significantly shortened the travel time and increased the likelihood of a successful arrival in Europe. Based on survey data from all over Africa, she finds that the opening of the route significantly increased young people’s intention to migrate, while the effect was reversed when the route was closed six years later. This suggests that migration costs can be an important deterrent for migration from Africa.
Benefits of DACA
Two papers discussed the implications of DACA (Deferred Action for Childhood Arrivals), a program that has come under much criticism under the Trump administration. This program grants illegal immigrants who came to the US as children the possibility to work legally for two years, along with the possibility of obtaining regular medical treatment. The paper presented by Jakub Lonsky investigates the effect of DACA on the health of migrants. The authors show that migrants eligible for DACA are more likely to seek treatment early when a condition is developed, resulting in better health. A second paper presented by Na’ama Shenhav finds that young migrants who are eligible for DACA delay their entry into the labor market and rather invest in education. Both papers provide compelling evidence that DACA is very beneficial for migrants in the US while being a fairly cheap program.
Britain’s got talent
Productivity growth in the UK has conspicuously lagged behind that of other G7 nations since the global financial crisis. The latest quarterly figures perpetuate what has come to be known as Britain’s “productivity puzzle”.
This flatlining of productivity has been unprecedented in the post-war era. Productivity (which measures output per hour and/or output per worker) would have been 16% higher by 2015 if the pre-recession level of productivity had been maintained. That this productivity slump has endured well beyond the financial crisis has become a major policy concern given that the pace of productivity growth determines a nation’s material well-being.
Meanwhile, efforts to jolt the patient back to life have taken on an especially urgent air in the face of Brexit. The fear of a “talent exodus” in the wake of Britain’s withdrawal from the EU, coupled with a possible restriction on migrant flows and the impact this might have on business, has set alarm bells ringing.
So, too, have the reality of accelerated technological change and the consequent potential mismatch between the skills that employees possess today and the skills that they are likely to need in the future. Small wonder that every major political party has called for better training and an improvement in the skills of the UK’s existing workforce. It is well established that an improvement in skills helps boost productivity.
But how is this upskilling best achieved? Government-backed efforts currently revolve around the Investors in People standard, which is a benchmark for good training and staff development in organisations. Companies that sign up to the initiative and meet its guidelines are rewarded with an accreditation.
With Brexit on the horizon and the productivity puzzle persisting, we seem to be rapidly nearing the point at which the effectiveness of this voluntary scheme is called into question or requires further investment.
Embracing the upskilling effort
The Investors in People initiative has assisted thousands of businesses since its launch in 1991 – more than 10,000 over the last 27 years. And my recent IZA discussion paper looking at its effectiveness shows that it brings businesses genuine benefits in terms of workforce upskilling – and so also benefits the wider economy.
I examined data from the Workplace Employment Relations Survey, a national survey of all UK businesses with five or more employees, which gives a comprehensive picture of organisations’ attitudes to workforce training. The data include responses to questions related to different aspects of on-the-job training, such as computing, teamwork, leadership, problem solving and customer service. Analysing these and focusing on almost 900 panel organisations in the 2004 and 2011 surveys, there was a clear and positive link between the Investors in People accreditation and upskilling in the private sector.
This is solid evidence that the initiative is effective. In particular, it was linked with helping organisations train staff in soft skills such as teamwork and communication and more practical ways of boosting productivity such as computer training and operating new equipment.
On-the-job training, at least in the short term, is therefore one of the most plausible policy tools available for overcoming the UK’s poor productivity growth, preparing for a challenging Brexit and the growing skills shortage that this could exacerbate.
Upscaling upskilling
Despite the clear success of the Investors in People initiative and the number of businesses it has helped, logic alone dictates that many thousands more have had nothing to do with it. The number of UK small and medium-sized enterprises (SMEs) alone is thought to be more than five million.
The idea of making the Investors in People and similar initiatives compulsory sounds impractical – accommodating five million accreditation-seeking businesses seems fanciful. But with pressure to improve the skills of the UK’s existing workforce never so intense, there’s a need to ensure upskilling takes place on a truly significant scale.
Upskilling initiatives will not entirely solve the productivity puzzle. But it is a good start and best applied to the private sector. The public sector, which includes the NHS, consumes a significant amount of public resources and yet struggles to meet the demand for its services. It is in desperate need of a productivity boost, particularly given its reliance on EU workers. Yet, my research found that the Investors in People accreditation was not as effective in improving skills in the public sector. It may therefore need its own specially-designed upskilling programme.
Needless to say, solving the UK’s productivity puzzle is a daunting prospect. But the evidence around upskilling shows that at least some of the country’s problems can be fixed through rolling out more training programmes. The talent is there. It needs to be better developed.
Note: This article was originally published on The Conversation. Read the original article.
Labor productivity and the digital economy
How do digitalization and automation affect labor productivity and the functioning of labor markets in general? The impact of new technologies, one of the key questions regarding the future of work, was at the focus of the second annual workshop of the IZA program area “Labor in the Macroeconomy” jointly organized with the OECD. Continuing the successful cooperation between both institutions, 18 researchers presented their work.
Keynote speeches were given by Jens Suedekum (pictured on the right) and Juan F. Jimeno, who discussed the empirical effects of robots on the evolution of German local labor markets and their theoretical impact on macroeconomic growth and distribution, respectively.
Felix Koenig presented his paper “Superstar Earners and Market Size: Evidence from the Entertainment Industry.” Exploiting the roll-out of television in the US in the post-war years as a quasi-experiment, he documents the substantial effect of entertainers’ earnings from this sudden increase in market size. The estimates imply that a doubling of the market size increases top incomes by about 10%, providing new evidence on the magnitude of the superstar effect that has been difficult to measure to date.
In “The UK Education Expansion and Technological change,” Wenchao Jin and her co-authors seek to explain the fact that despite tremendous educational expansion, UK graduate wage premiums remained largely unchanged across cohorts. They isolate different organizational firm structures as a potential explanation, rejecting several alternatives. According to this theory, firms in the UK adapted by altering their organizational structures towards less centralized firms, which are better suited to a well-educated workforce.
Duncan Roth presented the paper “Routine Tasks and Recovery from Mass Layoffs” on the long-term costs of job loss by an occupation’s degree of routine density. The authors find that workers in routine-intensive occupations suffer stronger negative effects on earnings and re-entry probabilities. This might be explained by loss of human capital in routine-intensive occupations.
Download all the presented papers below (presenting authors mentioned first).
Third Annual IZA Junior/Senior Symposium held in Bonn
This symposium brought together young European and American labor economists (five each from a set of 80 people who had submitted articles) to present their work and discuss each other’s papers under the guidance of two senior labor economists, Simon Burgess and Daniel S. Hamermesh. In line with IZA’s mission, each paper not only advanced scholarship but also provided implications for policy.
Resumes and the truth
For their paper “Employer Learning, Labor Market Signaling and the Value of College: Evidence from Resumes and the Truth,” Daniel Kreisman and his co-authors linked resumés from applicants at a job website to national U.S. data on people’s college attendance and graduation. The article shows that many job applicants omit their experiences at colleges and universities where they did not obtain a degree. These omissions suggest that the widely disseminated estimates of the returns to additional education are error-ridden, since the underlying measures of education are themselves error-ridden.
Longer working horizon
Francesca Carta presented her co-authored work on “The Effect of a Longer Working Horizon on Individual and Family Labour Supply.” The study examines how a sudden and substantial increase in the pensionable age in Italy altered older Italians’ attachment to the work force. The results confirm that raising the retirement age induces a big increase in the number of older people still working/not retiring, with the largest increase among those who previously would have been able to retire.
Download all the presented papers below (presenting authors mentioned first).
Global terrorism decreases well-being and shifts political attitudes rightwards
Recent decades witnessed a massive increase in the occurrence and intensity of global terror perpetuated by religious, nationalist or political groups. Media reports about the death toll of terrorism are omnipresent, even for individuals who never personally have been at risk to be hit by a terrorist attack.
A new IZA study by Alpaslan Akay (University of Gothenburg and IZA), Olivier Bargain (Bordeaux University and IZA), and Ahmed Elsayed (IZA and ROA, Maastricht University) analyzes the potential psychological effects of the ever-salient terror and demonstrates a strong negative effect of global terrorism on individual life satisfaction.
Their estimations are based on a unique combination of data sources: over-time observations of individual life satisfaction from Australia, Germany, Russia, Switzerland, the UK and the US matched to daily information on the 70,000 terror events that took place worldwide during 1994-2013.
The authors find a strong negative impact of global terror on well-being. The loss in average life satisfaction due to terror during that period has been equivalent to the loss in life satisfaction associated to a loss in income by 6% to 17%.
Not every terror attack affects life satisfaction in the same way – rather, both geographical and cultural proximity to the victims of terror, as well as more extensive media coverage facilitate the effect.
In addition, global terror has increased the intention to vote for conservative parties, playing its role in explaining the recent success of right-wing populists all over Europe.
How the Chernobyl cloud affected cognitive abilities in Germany
The past four decades have seen a drastic increase in radiation exposure. Today, the average individual receives almost twice the annual dose of radiation compared with 1980. This increase is almost entirely due to man-made sources of radiation such as CT scans, x-rays or mammograms, as well as flying, during which people are exposed to cosmic radiation.
However, while there is no doubt about the negative consequences of very high doses of radiation — those received by survivors of an atomic bomb or a nuclear disaster — the literature has reached no consensus on the consequences of small (subclinical) doses of radiation.
A recent discussion paper by IZA researchers Benjamin Elsner and Florian Wozny analyzes to what extent low doses of radiation, prevalent on a day-to-day basis in a developed country, affect cognitive skill development. To provide an estimate of the causal effect of radiation, they use a natural experiment: the regional variation in nuclear fallout caused by the Chernobyl disaster in 1986. After a failed simulation of a power cut, an uncontrolled chain reaction led to the explosion of a nuclear power reactor, with a radioactive cloud drifting over Europe in the week after the accident.
German regions were exposed to this cloud of radioactive fallout dependent on the rainfall during the critical period when the contaminated cloud was hanging over Germany. The highest level of fallout went to Bavaria and Baden-Wuerttemberg in the south, as well as parts of former East Germany. Differences in contamination are considerable, with the most affected soils displaying a contamination 500 times as strong as in the least affected region. Today, more than half of the fallout is still in the ground, although over time it has been washed out into deeper layers of soil, thereby reducing the external exposure of the population. However, exposure through ingestion is possible until today, as certain foods — in particular mushrooms and game — still exceed radiation limits in parts of southern Germany.
Using survey data on cognitive tests as well as a residential history with data for the Chernobyl-induced soil surface contamination provided by the Federal Office for Radiation Protection, the authors show that especially older cohorts who lived in highly-contaminated areas perform significantly worse in cognitive tests 25 years after the accident. These results not only underscore the potential negative consequences of nuclear power generation. They also suggest that even low doses of radiation, e.g. caused by medical procedures and air travel, have human capital costs. Policymakers can help minimize these costs by reducing the number of unnecessary CT scans and investing in alternative sources of energy.
The study by Elsner and Wozny received the Best Paper Award at the Spring Meeting of Young Economists in Palma de Mallorca, the Second Prize at the Health and Environment Conference in Essen, and the Novartis Prize for the best health paper at the Annual Conference of the Irish Economic Association in Dublin.
Job applicants under a vacancy referral scheme are viewed as less motivated
One of the most important instruments used by the public employment agencies in many countries to activate the unemployed is the instrument of a vacancy referral. Here, the public employment agency matches job seekers with open vacancies, from which point onwards the job seeker is obliged to apply for the given vacancy.
Microeconometric studies have shown that the effectiveness of such vacancy referral measures is limited. A possible explanation is that employers have a lower opinion of applicants of whom they know that they have been referred to the vacancy. This explanation has been tested in a new IZA discussion paper by Eva Van Belle, Stijn Baert (both Ghent University), Ralf Caers, Marijke De Couck (both KU Leuven) and Valentina Di Stasio (Utrecht University).
Lower job interview probability
Candidates who have been referred by the public employment agency prove substantially less likely to be invited for a job interview than candidates with similar characteristics (in terms of gender, education level, professional experience and previous unemployment) who have applied for the job directly.
The study shows that the referred candidates are mainly seen as less motivated than candidates who applied directly. According to the authors, this perceived lower motivation seems crucial when making the decision to invite a candidate for an interview and to hire the candidate.
The intellectual and social baggage of the referred candidates is also clearly deemed lower. Moreover, they are seen as less trainable, what nevertheless did not substantially matter for the decision to invite the candidate. The assumption that the referred candidate would be perceived as someone who has been often rejected by colleague-recruiters was not confirmed.
Method
The results are based on an experiment in Flanders (Belgium), where 205 professional recruiters judged five fictitious job candidates. These candidates differed in gender, level of education, experience, length of previous unemployment, and whether or not they were referred by the public employment agency. The participants ranked these candidates and indicated to what extent they would invite them for a job interview. In addition, they rated the candidates’ motivation, intellectual and social abilities, trainability and assumed rejection by other employers.
Can foreign aid reduce emigration?
Politicians in Europe and the United States alike have issued an urgent mandate to their respective national development agencies – focus on deterring migration from poor countries.
The EU has pledged €3 billion to combat the so-called “root causes” of destabilization, forced displacement and irregular migration from Africa. The U.S. government has similarly poured hundreds of millions of dollars into addressing the key drivers of unaccompanied, undocumented child migration from Central America.
For such efforts to succeed, two outcomes are required: First, foreign aid must substantially change the economic and social conditions in migrant origin countries, and second, such change must cause fewer people to move.
It is not enough for these aid funds to target development outcomes which could shape migration in principle. Aid must also affect the desired in-country outcomes to a sufficient extent to deter future emigration.
The scientific evidence on whether foreign aid has deterred emigration from poor countries in the past is sobering.
The first key question is as follows: How long might it take for a now-poor country to develop to the point where emigration begins to fall?
The result may be shocking: almost 200 years, at the average historical growth rate. Emigration is unlikely to systematically decrease until countries reach a per capita GDP of about 8,000 to 10,000 U.S. dollars at purchasing power parity.
And even if one were to assume very optimistically that development aid could raise growth rates by two percentage points – a tripling of the current rate – reaching this point would still take half a century.
But it is far from clear whether such growth is feasible. Many rigorous studies fail to detect any growth effect of aid. And even if aid could plausibly achieve desired growth outcomes, it would require aid agencies to spend drastically more money on such projects.
It is similarly unclear whether foreign aid can positively impact youth employment, conflict prevention, and human rights. While some programs have had small positive effects, it remains ambiguous whether such interventions can be sustainably scaled for broader impact.
This is not to say that aid cannot affect conditions in major migrant origin countries in future. But, based on our research, there is one clear implication: Aid would need to be implemented in previously unprecedented ways, at much higher levels of funding and over generations, in order to sufficiently affect major drivers of migration.
The second key question is: how does migration behavior respond to these outcomes? Does development – better incomes, health, and education – lead to decreased emigration?
The evidence here shows that emigration from middle-income countries is typically much higher than from poor countries. Specifically, 67 of the 71 countries that grew to middle-income status over the past 50 years also saw increased emigration rates.
This suggests that a higher level of development actually does more to encourage migration in the poorest contexts than to stem it.
The main political implication of these findings is equally clear: Western politicians currently issuing public appeals to address the root causes of migration must resist the temptation to oversell the – at least implicit – promise they are making to their electorates. More and/or better focused aid is not likely to deter migration from poor countries.
Under the best of circumstances, assuming elevated funding and a singular commitment by all parties to make development aid effective this time around, it will take generations for this effect to set in.
These findings suggest one key lesson for policymakers: Aid efforts aimed at shaping migration must look beyond deterrence. Demographic realities imply that large-scale migration will continue in some form for the foreseeable future.
While traditional aid programming and interdiction are unlikely to deter the majority of these flows, aid agencies seeking to shape future migration flows should instead focus on cooperation with migrant-origin countries to shape how migration occurs, maximizing its potential benefits for everyone involved.