What a surprise! Taking in refugees isn’t detrimental to society

Back in 2015, Germany, recognising the humanitarian crisis in Syria agreed to allow any refugee that had made it to another EU country to file claim asylum in Germany. Inevitably, this resulted in a large influx of refugees – roughly one million were registered at German borders in 2015, with a further 400,000 or so registering in 2016.

Equally inevitably, this was met with howls of protests from those who wanted to “protect their borders”. For example, claims regarding the level of crimes committed by refugees and immigrants littered the likes of the Daily Mail and the Express, despite the fact that said crimes accounted for an infinitesimal proportion of all crimes in Germany during that period.

However, until now there hasn’t been a systematic study of the impact of Germany’s decision to accept large numbers of refugees – a paper by Gehrsitz and Ungerer fills this gap.This paper looks at the impact of the number of refugees on local crime rates; domestic and refugee success in the job market; and domestic attitudes to refugees and immigration.Although there have been some studies that find that immigration / refugees are detrimental, but those studies are either methodologically flawed (e.g. the one by Piopiunik & Ruhose) or written by biased fools such as Borjas.

Given the fact that large numbers of refugees were accepted into Germany, if accepting refugees was detrimental to any of these areas, then those effects would be almost certain to show up in this analysis. However, the study indicates that accepting large numbers of refugees is not detrimental to the local population.

In order to do so, the study makes use of the fact that refugees were allocated to different German states simply based on what accommodation spaces were available, creating a pseudo-random distribution of the number of refugees across the different German states.In essence, provided that these allocations were not correlated with factors such as the initial (and trend) income, unemployment etc across the different states, this provides a natural experiment by which the impact of the number of refugees on the domestic population can be estimated. Importantly, the paper finds that there is no correlation between a state’s initial labour market conditions, demographics, crime rates etc. such that the inferences resulting from the analysis are highly likely to be valid.

The paper then looks at the impact of the number of refugees that entered a particular state during the 2015-2016 period on a state’s 1) change in crime between 2013 and 2015; 2) change in unemployment rate between 2013Q1 and 2016Q1; and 3) change in share of the vote obtained by the anti-immigration “Alternative fur Deutschland” party between the federal election in 2013 and the state elections in 2016, while also controlling for other factors (such as state GDP per capita, demographics etc.) that vary across the German states.

Perhaps unsurprisingly, the paper finds that refugee inflows have:

  • no negative impact on the rate of domestic unemployment in a state (in fact, the results suggest that an increase in refugees actually decreases domestic unemployment, but slightly increases unemployment among non-German workers likely because the refugees themselves start to show up in the unemployment figures);
  • a tiny impact on crime rates – a large increase in refugees does not lead to an “explosion” in crime, but merely increases reported crimes by only 1.5%, with the majority of this appearing to come from an increase in fare dodging on public transport;
  • no impact on support for the anti-immigration political party – in other words, having more refugees in an area does not seem to lead to people in those areas voting in favour of decreasing immigration.

Now, one potential issue with some studies that find “no effect” of a variable is that this finding of no effect is driven by the coefficients being estimated imprecisely – this is usually indicated by standard errors that are improbably large. However, in the case of this study, the standard errors do not appear to be overly large, such that there is no reason to believe that the findings of no effect are due to imprecise estimates of the coefficient.

Hence, there is strong reason to believe that accepting even a large number of refugees is not detrimental to the local population in terms of crime or unemployment (or other factors that might drive local people to vote for an anti-immigration political party). Although these results do only refer to short-term effects (i.e. those occurring within 6-12 months of a large influx of refugees), there is no reason to believe that the long-term effect would be any different. Indeed, many studies (e.g. Foged & Peri, the IMF) find that the domestic population actually benefits from taking in refugees and immigrants in the long-run.

In other words, arguments that taking in refugees will harm (or be at the expense of) the domestic population are highly likely to be false.

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Refugees and credible commitments

A couple of days ago The Telegraph published an article by Suzanne Evans (the Ukip deputy chairman) concerning whether or not the UK should agree to take the 3,000 unaccompanied children that are currently in the Calais jungle. The main argument is embodied in the paragraph from the article:

Take 3,000 from the jungle and 3,000 more will arrive within days. Then another 3,000 will arrive days after that. How many will die on the journey? How many will be terrified, starved, subjected to life-threatening diseases and horribly abused on the way to France? How many of the older kids will be exposed to hard drugs while they’re in the camp, which appears to be run by louts at best and hardened criminals at worst? The fact is, the more we take in, the more children will be abandoned to the cruel sea and the even crueler people traffickers. Is this really what we want?

In other words, Evans is saying that if the UK was to accept the current 3,000, then that would only encourage more families to make the journey, with subsequent risks to those families.

A family’s decision whether or not to attempt the journey to the UK comes down to a balance between “pull” factors (e.g. the chance of getting into the UK) and “push” factors (e.g. the danger involved in not making the journey and remaining in their home countries). Evans assumes that the UK accepting 3,000 children would materially alter that decision. If we take that assumption as given, then Evans also assumes that the UK cannot credibly commit not to take any more children after the current 3,000.

What does “credibly committing” to something mean? A credible commitment occurs when an entity makes a believable and enforceable promise to do (or not do) something. This is often discussed within the field of monetary policy where a central bank cares about having lower inflation and lower unemployment. If the central bank simply announces that inflation will be lower, then once people belief that inflation will be lower, the central bank has an incentive to renege on the announcement so as to obtain lower unemployment at the expense of higher inflation. Hence, the original announcement would not be believed in the first place, preventing the central bank from obtaining lower inflation.

However, if the central bank could come up with a way for it to “credibly commit” to keeping inflation low, then the public would believe its announcement, such that inflation could be decreased. How to achieve such a credible commitment? In the case of a central bank, an inflation target is one potential way.

But what relevance does this have to migrants making a perilous journey, you might ask?

As mentioned, one assumption implicit in Evans’ argument is that the UK cannot credibly commit to saying “after these 3,000 children we won’t accept any more”, thereby meaning that other families would make a dangerous journey to try to get to Calais in the hope that they too would eventually be accepted into the UK. However, if the UK was able to credibly commit to taking such action (the form that such a credible commitment could take would be for various politicians to decide), then migrants choosing between making the dangerous journey or not would have less of an incentive to make said journey.

Moreover, a credible commitment by the UK might not necessarily affect families’ decisions at all. If the “push” factors are so strong, a slight change one way or another in the “pull” factors via a UK credible commitment is unlikely to substantially decrease the number of families making the journey.

As such, it seems that whether or not the UK accepts the current 3,000 children in the Calais jungle is highly unlikely to have a substantial impact in encouraging additional families to try to make a similar journey.