Taking in refugees has costs — and potential benefits

Scott Tong Sep 8, 2015
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Taking in refugees has costs — and potential benefits

Scott Tong Sep 8, 2015
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The mass movement of tens of thousands of people in Europe is starting to fray the bonds of the European Union, as countries take different approaches to welcoming — or rejecting — migrants and refugees.

But this week, Germany offered to take half a million new migrants a year. The cost? More than $11 billion dollars a year.

The German media suggest the country isn’t just motivated by doing the right thing. It’s a self-interested equation. In other words, the economic benefits of the taking in migrants and refugees may equal or even exceed the costs.

Germany figures each refugee will cost $14,000 a year to feed, house, teach and pay a monthly stipend.

In the long term, though, the country may well make that money back, largely because Syrian refugees tend to be skilled and young.

“Given how young they are, and how many years they are going to be working in the future, it is likely that over time that burden, that initial burden, is going to be paid back by their taxes and their contribution to the host economy,” says economist Carlos Vargas-Silva at Oxford University’s Centre on Migration Policy and Society.

There is evidence in research of a net economic gain, though there is an important caveat.

“The benefits won’t begin to amass until three, four or five years down the road,” says Demetrios Papademetriou, founder and president of the Migration Policy Institute’s European office.

Still, to get that economic return, a country has to invest — that is, settle refugees, give them asylum and train them.

“And once people sort of graduate from these programs, once those gaps in qualifications are filled, people should have an opportunity to go directly into the labor force,” Papademetriou says.

Germany’s labor force is aging and shrinking: from 45 million people today to about 36 million in just 15 years, assuming no immigration. In other words, it needs new workers, to fill offices and fund the country’s retirement system. 

Much of Central and Southern Europe shares the same demographic projection, although taking in outsiders is a hard sell politically.

“Germany does have an opportunity here to show a way to cope and talk about it without it getting chewed up into polemics,” says Jackson Janes, president of the American Institute for Contemporary German Studies at Johns Hopkins University. “It’s certainly going to be tested very severely in the coming months.”

One voice inviting in refugees is the head of Mercedes-Benz and chairman of Daimler, Dieter Zetsche. Over the weekend, Zetsche said in an interview that today’s refugees “are exactly the people we’re searching for.”

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