A Note on Economic Impact of Refugees in Host Countries

Ik-Whan G. Kwon, Sung-Ho Kim


Refugee issue has been debated mostly in the political and humanitarian arena and less in the economic impact in the host countries. Furthermore, even if refugee issues were discussed from economic perspectives, most studies use macro-emotionally charged tools rather than economic theory-based argument. In addition, discussions have been limited to short-term economic impact on host countries and ignore a long-term economic implication. Although inflation and labor displacement in host countries by the refugees are expected, this study reveals that the host countries benefit greatly from refugees in the long-run in almost every aspect of life. If refugees decide to settle permanently in the host countries, a structural change in economic area occurs in the host countries.

Keywords: Structural change, economic multiplier, semi-skilled labor, labor substitution effect, real income.

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