The economic case for letting in as many refugees as possible

The reason we should care about refugees is because they are people.

But, unfortunately, for many people that is an insufficient moral claim. Even for the tens of thousands of Afghan people who put their lives in jeopardy working alongside the US military over the past 20 years. So let’s put it another way: Evidence shows that accepting refugees benefits the host country too.

That hasn’t stopped some from arguing that refugees are somehow a burden to the US, as the country watches the aftermath of President Joe Biden’s decision to pull out of Afghanistan.

On Fox News, Tucker Carlson ended up blaming refugees for our existing housing crisis. After correctly diagnosing the problem as insufficient housing supply, he does not go on to explain what most every housing expert has clearly stated would be the solution (that America needs to build more homes to meet rising demand). Instead, he says the reason the country has rising housing demand is ... immigrants?

“When the supply shrinks, the cost rises,” Carlson says. “One reason it’s happening is that America’s becoming a lot more crowded than it ever was and one of the reasons for that is that we’re living through the biggest influx in refugees in American history.”

This is false; rising demand is due to historically low mortgage rates and the largest generation in American history (millennials) entering the housing market in force. (This is all the more ironic since Carlson himself has railed against the actual solutions to the housing crisis on his show.) The claim that America has more refugees than ever is also false, as research from the Migration Policy Institute shows, the country is actually letting in record low numbers of refugees.

The rhetoric that the nation is overcrowded is not borne out in reality. Cities like London, Seoul, Tokyo are much denser than any of America’s large cities, making room for America’s current population as well as immigrants is entirely within policymakers’ control.

But this desire to depict refugees as a burden is widespread. Even some proponents of opening America’s doors use language similar to Republican Sen. Lindsey Graham’s statement in 2015 that the country should accept our “fair share” of Syrian refugees. In the White House, concerns that refugees might be politically costly weigh heavy: Politico reported that the Biden administration has previously worried that bringing in more refugees would prompt conservative backlash and imperil their domestic policy agenda.

The fact of the matter is that for selfless and self-interested reasons alike, the US should welcome more people. In small towns or declining cities, they can help reverse depopulation trends that threaten the financial viability of the region. Even in growing places where many people seek to live and work, refugees provide a clear economic benefit.

Migration Policy Institute

UC San Diego political scientist Claire Adida recently reviewed the economic literature in a Twitter thread, concluding that “refugees are an economic boon to their host communities.”

She cites research showing that refugees in Rwanda who received $120 to $126 in cash aid from the United Nations “increased annual real income in the economy by $205 to $253.”

Evidence in the US shows that “after 6 years in the country, these refugees work at higher rates than natives. ... [Researchers] estimate that refugees pay $21,000 more in taxes than they receive in benefits over their first 20 years in the US.”

Beyond their generalized impact, refugees can also help solve one of the most difficult urban policy problems facing the US: how to induce growth in cities and towns outside of the coastal superstar cities and the growing sunbelt. A 2019 report by Economic Innovation Group (EIG) found that “uneven population growth is leaving more places behind. 86 percent of counties now grow more slowly than the nation as a whole, up from 64 percent in the 1990s.”

Several market forces have pushed the majority of good-paying jobs into a handful of cities. This phenomenon is referred to as “agglomeration economies,” something economist Enrico Moretti explained to Vox earlier this year: “Agglomeration economies ... [are] the tendency of employers and workers to cluster geographically in a handful of locations.”

One factor is that employees who splinter off to start their own firms often do so in the same cities that they were working in. More broadly, workers and industries clustering in the same place increases employment opportunities for workers and increases the qualified labor pool for employers. Additionally, a large number of young college graduates have a preference for urban environments, and firms often follow valuable labor pools.

This has an outsized effect on the US economy, as more higher-income workers cluster in the same cities, the demand for goods and services (anything from legal services to restaurants and plumbers) shifts as well. Encouraging firms and young professionals to move to your city is a hard problem for mayors.

As highly educated workers move away, cities may shrink in population. That, in turn, leads to fewer taxes, which means declining public services. It also means less demand for goods and services which leads to higher unemployment as businesses don’t need as many workers to service a shrinking population. This becomes a dangerous spiral as higher unemployment and a declining young population makes these places even less attractive to new entrants and new businesses. This is one of the most vexing problems declining neighborhoods and towns face.

One way to get around this problem? Refugee resettlement.

The authors of the EIG report propose a similar, innovative policy proposal: place-based visas, called “heartland visas,” that would bring immigrants to the US to live in communities “facing the consequences of demographic stagnation” and in desperate need of new entrants. These visas would not limit where immigrants can visit or travel but would “simply require that their residence and place of work be somewhere within a specific geography.” Similar visas have been successful in Canada and Australia.

There’s a reason why several governors (both Republican and Democrat) have indicated their support for refugee resettlement in their states.

While many have tried to make the case that immigrants harm native-born Americans’ economic prospects, the research is clear on this too: Immigration doesn’t lower wages for native-born people. Economist Noah Smith reviews the academic literature on refugee waves and finds that immigration “is a positive labor demand shock;” that “immigrants don’t cause unemployment for the native-born;” that there was “no labor market impact” from immigration in Turkey or in Israel; that “immigration increased native-born wages in the long run;” and it didn’t even harm “high-school dropouts.”

The case for opening America’s doors is clear. Refugees and immigrants are not only good for the economy, they can help us reverse dangerous trends in stagnant cities and towns. Policymakers should stop referring to refugees as a burden and trust that new Americans will benefit the nation.

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