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Refugees May Be Good For The Economy

As the Trump administration continues pushing to limit — and temporarily block entirely — the admission of refugees into the United States, new research finds that refugees, over time, end up being valuable contributors to the economy.

President Trump has justified his suspension of the U.S. refugee program primarily on national security grounds, arguing that his administration needs time to examine the country’s vetting procedures. (On Monday, the 9th Circuit Court of Appeals refused to let Trump’s policy take effect; the administration has appealed a similar ruling from another circuit to the Supreme Court.) But opponents of the U.S. refugee program have also criticized it on financial grounds, tallying not only the direct government costs and resources used for the resettlement programs but also the indirect costs incurred when refugees enroll in welfare programs. A new working paper from the National Bureau of Economic Research, however, argues that it is a mistake to focus on the costs of refugee resettlement without also looking at the economic and financial benefits.

“You can’t just look at one side of this equation. [They’re] getting benefits, but they’re also generating income,” said William Evans, a Notre Dame economist and one of the paper’s authors. “They’re living [here], so therefore they are paying taxes.”

To try to estimate both the costs and benefits of admitting refugees, Evans and his coauthor, research assistant Daniel Fitzgerald, used data from the American Community Survey to identify people who are likely to be refugees. From that group, researchers pulled a sample of 18-to-45-year-olds who resettled in the U.S. over the past 25 years and examined how their employment and earnings changed over time. They found that the U.S. spends roughly $15,000 in relocation costs and $92,000 in social programs over a refugee’s first 20 years in the country. However, they estimated that over the same time period, refugees pay nearly $130,000 in taxes — over $20,000 more than they receive in benefits.

The authors found that, when compared to rates among U.S.-born residents, unemployment was higher and earnings were lower among adult refugees during their first few years in the country, but these outcomes changed substantially over time. After six years in the U.S., refugees were more likely to be employed than U.S.-born residents around the same age. The longer they live longer in the U.S., the more refugees’ economic outcomes improved and the less they relied on government assistance. While refugees’ average wages are never as high as the average for U.S.-born residents, after about eight years in the U.S., refugees aren’t significantly more likely to receive welfare or food stamps than native-born residents with similar education and language skills.

Critics of the U.S. refugee program rejected the study’s findings. Steven Camarota, the director of research for the Center for Immigration Studies, a think tank that supports limiting immigration to the U.S., noted that the Notre Dame researchers excluded costs associated with education, incarceration and law enforcement and looked only at working-age refugees. “They exclude costs for older refugees, which can be substantial,” Camarota wrote in an email. (Evans said in an email that less than 4 percent of refugees were over 65 when they entered the U.S., and said the paper computes the majority of the costs of social programs that benefit residents of all ages.1)

The paper does highlight the challenges faced by refugees when they first arrive in the U.S., however. The authors found that refugees who enter the U.S. before the age of 14 adjust better than those who are older when they arrive; older teenagers are more likely to face language barriers and may enter the country alone. Experts said this trend highlights the importance of programs that help refugees — particularly older teens and adults — become economically self-sufficient as soon as possible.

“[Resettlement programs are] essential in giving people a sort of head start in getting settled,” said Kathleen Newland, co-founder of the Migration Policy Institute, a think tank that generally supports liberal immigration policies. “There is also the nonmaterial part — to help refugees with job search, language acquisition, financial support, help get their kids enrolled, how to use public transportation, acquire a car — all of these kind of basic benefits to understand the system here.”

Under the Trump administration, however, many resettlement programs are struggling to stay afloat financially. Trump issued an executive order in March that would cap the number of refugees admitted to the country at 50,000 per year, less than half the number that was allowed under President Obama. Courts have blocked implementation of the order, but the number of refugees entering the U.S. has nonetheless fallen sharply since Trump took office. Since how much funding resettlement programs receive is determined by the number of refugees they resettle, organizations across the country have been cutting back, leading to layoffs and restructuring. That could make it harder for future refugees to do as well as their predecessors.

 

Footnotes

  1. The study assessed or imputed the costs of welfare, Supplemental Security Income (SSI), Social Security, food stamps, Medicare and Medicaid.

Kathryn Casteel writes about economics and policy issues for FiveThirtyEight.

Michelle Cheng is FiveThirtyEight’s data reporting intern.

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