Refugee crisisThe economic impact of refugees in Sweden
The world currently has more refugees and internally displaced persons than it has had since the Second World War. Many countries are reluctant to take refugees in. Security is a recent concern, but a major underlying reason is the perceived financial burden which would result from larger intake of refugees. But what, in reality, is the economic impact of these new arrivals? Since 2005, Sweden has taken in more refugees per capita than any other European country. A detailed study of the Swedish case shows that the acceptance of those refugees has resulted in a net fiscal redistribution from the non-refugee population to refugees corresponding to 1.0 percent of Swedish GDP – with four-fifths of the redistribution due to lower public per capita revenues from refugees. A clear takeaway from this research is that policies should focus on integrating refugees into the labor market as quickly as possible.
The world currently has more refugees and internally displaced persons than it has had since the Second World War. Since late summer 2015 massive numbers of refugees from countries like Syria, Iraq, and Afghanistan have streamed into Europe — with policymakers often in disagreement over how to react. The readiness of many wealthy countries to provide asylum to these refugees is waning. Security is a recent concern, but a major underlying reason is the perceived financial burden which would result from larger intake of refugees.
But what, in reality, is the economic impact of these new arrivals? A new study, published in Population and Development Review, a journal of the Population Council, examines the case of Sweden, the country with the largest number of refugees per capita (the Population Council Journals notes that if all fifteen pre-2004 EU member states had accepted refugees at the same rates of immigration per capita as Sweden did from 2005 to 2014, the total number of refugees in these countries would have been 5.9 million, not the current 740,000). The study finds that the net fiscal redistribution from the non-refugee population to refugees in 2007 corresponded to 1.0 percent of Swedish GDP in that year. Four-fifths of the redistribution is due to lower public per capita revenues from refugees compared with the total population, and one-fifth to higher per capita public costs.
This research offers the first estimate of the fiscal redistribution specifically to refugee immigrants in any Western country.
“The fiscal redistribution to the refugee population in Sweden is fairly sizeable,” said Dr. Joakim Ruist, the paper’s author. “At the same time it is not a cost that is difficult for the country to bear. Hence it is clear that other Western European countries, whose per-capita refugee intakes until this point have only been around one-tenth of the Swedish intake, could substantially increase their intakes without in any way endangering their welfare systems.”
The lower public revenues from refugees are a direct result of their lower employment rate; this was 20 percentage points lower among adult refugees than among all other adults. Thus a clear takeaway from this research is that policies should focus on integrating refugees into the labor market as quickly as possible.
— Read more in Joakim Ruist, “The Fiscal Cost of Refugee Immigration: The Example of Sweden,” Population and Development Review 41, no. 4 (December 2015): 567–81
