Can paying poor nations to admit refugees solve the mass migration puzzle?

Much of the commentary about Michael Kremer, named this week as one of three winners of the Nobel Memorial Prize in Economic Sciences, has justifiably celebrated his pioneering work in studying poverty — even now, many of us believe, the planet’s greatest moral challenge. But an important 2011 Kremer paper, overlooked in the celebration, helps to shed light on another great challenge of our day: refugee policy.

His work helps explain the immigration pressures that have been roiling politics around the world. In the wake of the disaster in Syria and other crises, refugees have flooded Europe. Nationalist parties have responded by playing to the sentiment that migrants are stealing jobs. They promise tougher standards for immigrants, a stance with the potential to harm migrants fleeing persecution. The United Nations puts the number of people seeking refuge in the tens of millions.

In the U.S., worries about immigration helped swing the 2016 presidential election. The fear that economic migrants hurt wages among blue-collar workers may not be well-founded, but in recent years has been widely shared. Polling data suggest that sentiment may be changing, but to the extent that the fear of economic loss becomes the basis of immigration policy, refugees are likely to suffer from it.

“The Economics of International Refugee Law,” which Kremer co-authored with Ryan Bubb and David I. Levine, presents a useful model to explain why refugee policy tends to become such a mess, even if everyone starts out with the best of intentions.

Kremer and his co-authors begin with a reminder that a nation that chooses to accept migrants fleeing political prosecution provides a public good from which other countries will benefit. The larger the number of countries that provide asylum, the less the incentives for others to do the same. This free-rider problem arises even if all nations are altruistic with respect to political refugees. Because admission is not costless to the host nation, a country that might otherwise accept a large number of refugees may nevertheless consider itself better off if those who fear persecution find asylum somewhere else.

This creates a problem: The countries that admit political refugees become overburdened and reduce the number of refugees they admit. As a result, even if every country is altruistic, the number of refugees left to be persecuted in their home countries increases.

The optimal solution, the authors note, is cooperation among host nations. Under this theory, the 1951 Convention Relation to the Status of Refugees may be viewed as a compact under which all signatories, by agreeing to accept political refugees, jointly supply the public good and increase the chances that any particular refugee will find a host.

So far, so good. The trouble is that it can be difficult for a potential host nation to tell whether a particular migrant is fleeing persecution or seeking economic opportunity. Nations tend to be less open to economic migrants because of a fear that the migration will hurt the opportunities for their own citizens and impose other economic costs.(1) This fear of admitting economic migrants will reduce the willingness to admit political refugees.

The result is the same even if a country would like to grant political asylum to all who deserve it. The difficulty of discerning an individual applicant's likelihood of persecution means a system of adjudicating claims will be necessary; the fear of admitting a large number economic refugees will lead to a high standard of proof. Other governments will respond by toughening their own standards for political asylum. The predictable result is a race to the bottom in which, worldwide, fewer refugees are admitted. This leads to the breakdown of the system envisioned by the 1951 treaty.

How do Kremer and his co-authors propose to solve the problem? They quickly dismiss the establishment of a centralized authority by whose decisions on refugee status the signatories to the convention would all be bound, and indeed such a solution would be politically impossible (and a quite bad idea). After reviewing the literature, they endorse an important proposal floated back in the 1990s: Wealthy countries should pay poorer countries to accept more migrants. In return, the poorer countries would agree to allow the refugees freedom of movement (no refugee camps) and the right to earn a living. Refugees, in turn, might be afforded a degree of choice over which nation to enter. Meanwhile, wealth would be transferred from developed to developing countries.

In today’s fractious era, many on the left and right alike will surely dismiss such a suggestion out of hand. But whatever your view of the paper’s solutions (the authors propose several), the deeper analysis of why immigration policy is so hard to fix deserves close attention. In common with the work for which the Nobel was awarded to Kremer and his fellow laureates, the paper on immigration represents a thoughtful and serious effort to use the tools of his trade to grapple with a pressing moral challenge. That’s a welcome contribution at a time when serious thought in public debate remains in tragically short supply.