Ms.Enrica Detragiache

Mr.Christian H Ebeke

Mr.Shekhar Aiyar

Nicoletta Batini

Mr.Sebastian Sosa

Mr.Antonio Spilimbergo

Ms.Bergljot B Barkbu

Mr.Helge Berger

Allan Dizioli

Ms.Huidan Huidan Lin

Ms.Linda Kaltani

Petia Topalova

Against the background of political turmoil in the Middle-East, Europe faces an unprecedented surge in asylum applications. In analyzing the economic impact of this inflow, this paper draws from the experience of previous economic migrants and refugees, mindful of the fact that the characteristics of economic migrants can be different from refugees. In the short-run, additional public expenditure will provide a small positive impact on GDP, concentrated in the main destination countries of Germany, Sweden and Austria. Over the longer-term, depending on the speed and success of the integration of refugees in the labor market, the increase in the labor force can have a more lasting impact on growth and the public finances. Here good policies will make an important difference. These include lowering barriers to labor markets for refugees, for example through wage subsidies to employers, and, in particular, reducing legal barriers to labor market participation during asylum process, removing obstacles to entrepreneurship/self-employment, providing job training and job search assistance, as well as language skills. While native workers often have legitimate concerns about the impact of immigrants on wages and employment, past experience indicates that any adverse effects are limited and temporary.

Economic Challenges

The Refugee Surge in Europe

Mr.Haonan Qu

Ms.Anna Ilyina

Mr.Ruben V Atoyan

Lone Engbo Christiansen

Mr.Nadeem Ilahi

Mr.Gil Mehrez

Ms.Faezeh Raei

Ms.Alaina P Rhee

Ms.Daria V Zakharova

This paper analyses the impact of large and persistent emigration from Eastern European countries over the past 25 years on these countries’ growth and income convergence to advanced Europe. While emigration has likely benefited migrants themselves, the receiving countries and the EU as a whole, its impact on sending countries’ economies has been largely negative. The analysis suggests that labor outflows, particularly of skilled workers, lowered productivity growth, pushed up wages, and slowed growth and income convergence. At the same time, while remittance inflows supported financial deepening, consumption and investment in some countries, they also reduced incentives to work and led to exchange rate appreciations, eroding competiveness. The departure of the young also added to the fiscal pressures of already aging populations in Eastern Europe. The paper concludes with policy recommendations for sending countries to mitigate the negative impact of emigration on their economies, and the EU-wide initiatives that could support these efforts.

Emigration and Its Economic Impact on Eastern Europe

Allan Dizioli

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