Refugee Impact on European Labor Market

The world is facing its worst refugee crisis since World War II. According to the United Nations Refugee Agency (UNCR), there are 21.3 million refugees across the globe. A vast majority of these refugees come from Africa and the Middle East, with Syrians accounting for nearly one-fourth of the total refugee population. Many of these refugees are flocking to the nation of Turkey, which is currently playing host to 2.5 million refugees, nearly one million more than any other nation. These refugees flock to Turkey with the hope of eventually journeying to the developed economies of Europe.

Throughout Europe, a fierce debate is raging over whether to allow more or less migrants into the continent. Much of this debate hinges on the economic impact a massive influx of people could have on the economy, particularly the labor market. With credible arguments supporting both sides of this debate, George Borjas, of Harvard University, and Joan Monras, of the Center for Monetary and Financial Studies, recently released a study analyzing four historical refugee labor supply shocks and their subsequent impact on the labor market of the host nation.

The four historical cases analyzed in this study are the inflow of Cuban Marielito’s into Miami in 1980; the re-entry of French repatriates along with Algerian nationals following the Algerian Independence War in 1962; the flow of Jewish emigres into Israel following the collapse of communism and the USSR; and finally, the continuous exudes of refugees from Yugoslavia following the decade of the Balkan wars between 1991 and 2001.

After segmenting both refugee and host nation populations by education level and performing a complex statistical analysis, Borjas and Monras concluded that “Exogenous supply shocks adversely affect the labor market opportunities of competing natives in the receiving countries, and often have a favorable impact on complementary workers.” Essentially, when low education refugees enter a nation, competing low education workers in the host nation are harmed, while high education workers benefit. The reverse case is also true when the majority of refugees are of high education, as was the case with the Jewish emigres in the 1990’s

The results of this study are unable to predict any clear outcome for today’s European crisis, as there is a wide demographic range of migrants, particularly from Syria. Syrian refugees come from a variety of socio-economic class, including many doctors, bankers, and other high paying professionals. In addition, over half of all Syrian refugees are children, meaning they still have the opportunity to receive a quality education once they relocate. The key takeaway from Borjas and Monras’ study is that the significant influx of migrants into Europe will have an impact on the labor market, the only question is what that impact will be.