The Refugee Surge in Europe: Economic Challenges

By Shekhar Aiyar, Bergljot B Barkbu, Nicoletta Batini, Helge Berger, Enrica Detragiache, Allan Dizioli, Christian H Ebeke, Huidan Huidan Lin, Linda Kaltani, Sebastian Sosa, Antonio Spilimbergo, Petia Topalova

January 19, 2016

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Shekhar Aiyar, Bergljot B Barkbu, Nicoletta Batini, Helge Berger, Enrica Detragiache, Allan Dizioli, Christian H Ebeke, Huidan Huidan Lin, Linda Kaltani, Sebastian Sosa, Antonio Spilimbergo, and Petia Topalova. The Refugee Surge in Europe: Economic Challenges, (USA: International Monetary Fund, 2016) accessed September 26, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

Against the background of political turmoil in the Middle-East, Europe faces an unprecedented surge in asylum applications. In analyzing the economic impact of this inflow, this paper draws from the experience of previous economic migrants and refugees, mindful of the fact that the characteristics of economic migrants can be different from refugees. In the short-run, additional public expenditure will provide a small positive impact on GDP, concentrated in the main destination countries of Germany, Sweden and Austria. Over the longer-term, depending on the speed and success of the integration of refugees in the labor market, the increase in the labor force can have a more lasting impact on growth and the public finances. Here good policies will make an important difference. These include lowering barriers to labor markets for refugees, for example through wage subsidies to employers, and, in particular, reducing legal barriers to labor market participation during asylum process, removing obstacles to entrepreneurship/self-employment, providing job training and job search assistance, as well as language skills. While native workers often have legitimate concerns about the impact of immigrants on wages and employment, past experience indicates that any adverse effects are limited and temporary.

Subject: Education, Labor, Labor markets, Migration, Population and demographics

Keywords: Aggregate demand, Asylum seeker, Displaced people, Entry wage, EU country, Euro Area, Europe, Immigrant, Labor force, Labor Market, Labor market integration, Labor markets, Migration, Pay, Private sector, Refugee, Refugees, SDN, Subsidy program, Unemployment rate, Wage assimilation, Wage gap, Wage subsidy

Publication Details

Pages:

50
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2016/002
Stock No:

SDNEA2016002
ISBN:

9781513552590
ISSN:

2617-6750

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