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March 15, 2016

NEW: Can market mechanisms help solve the refugee crisis?

A market for tradable refugee admission quotas could be an innovative and effective tool for solving the refugee crisis.

A ground-breaking new report, published on Tuesday 15 March 2016 by IZA World of Labor, suggests that combining tradable refugee quotas and matching mechanisms will be an efficient market solution to the refugee crisis, which would also protect refugee rights.

Full article: http://wol.iza.org/articles/can-market-mechanisms-solve-refugee-crisis/long

The use of market mechanisms—such as tradable quotas—to coordinate a cost-effective international common response to an issue, has a long-established tradition in economics, a good example being the effort to combat global climate change. Economist Jesús Fernández-Huertas Moraga utilises this concept in his proposed solution to the refugee crisis facing Europe: A market of tradable refugee admission quotas could provide an innovative solution to how to deal with the ever-increasing number of asylum seekers reaching Europe’s shores, and comes at a time when the EU seems to have reached a deadlock over its quest for a common response.

Moraga suggests combining a market for tradable quotas with a matching mechanism linking refugees and receiving countries. The market for tradable refugee admission quotas would allow refugees to be established wherever it is least costly to do so, while the matching system would link refugees to their preferred destinations, and host countries to their preferred types of refugees. The economic component—the tradable quotas market—would be combined with the humanitarian one—matching—making the solution politically and economically feasible.

Moraga proposes that a fully coordinated refugee acceptance system should include three stages. Firstly, responsibilities must be divided: A distribution rule will determine which countries should provide international protection to a given number of refugees. The second stage would be the opening of a market in which countries could trade the “obligations to provide protection” assigned in the first stage—Those countries that estimate the cost of hosting their assigned refugees as being too high would be willing to pay other countries to host them instead. Thirdly, a matching mechanism would match refugee preferences with receiving countries’ preferences to ensure that refugees are not forced to relocate to an undesired destination, thus ensuring the human rights of the refugees are protected.

Media Contact:

Please contact Sarah Williams for more information, a preview of the report or author interviews: Sarah.Williams@bloomsbury.com or +44 (0)20 763 155 08

Notes for editors:

  • IZA World of Labor (http://wol.iza.org) is a global, freely available online resource that provides policy makers, academics, journalists, and researchers, with clear, concise and evidence-based knowledge on labor economics issues worldwide.
  • The site offers relevant and succinct information on topics including diversity, migration, minimum wage, youth unemployment, employment protection, development, education, gender balance, labor mobility and flexibility among others.

Established in 1998, the Institute for the Study of Labor (www.iza.org) is an independent economic research institute focused on the analysis of global labour markets. Based in Bonn, it operates an international network of about 1,300 economists and researchers spanning more than 45 countries.