A new study of refugees’ impact on the U.S. economy will give both sides of the debate more to chew on, but it won’t settle anything.
Given the intensity of the American political debate on the issue, there is surprisingly little nationally representative data on what becomes of refugees who settle in America, largely because the Census does not count them as a distinct category of immigrants. So the release of a new NBER paper by William N. Evans and Daniel Fitzgerald that purports to track refugee outcomes is interesting news indeed.
Evans and Fitzgerald examined immigrant populations that are very likely to be refugees, such as recent arrivals from Syria or those who came here from the Balkans in the early 1990s. The paper’s most eye-catching finding would seem to bolster the arguments of those who advocate increasing the flow of refugees into the United States. The authors estimate that “refugees pay $21,000 more in taxes than they receive in benefits over their first 20 years in the U.S.” Initially, the data suggests, refugees are highly dependent on public assistance, as they tend to possess poor language skills and have little formal education. But they are also more likely to remain in the labor force than other Americans and, although their earnings never quite hit the American average, they eventually make up in tax receipts what they cost in social assistance their first few years.
This conclusion has received quite a bit of attention — libertarian economist Tyler Cowen highlighted it on his blog, center-left writer Matthew Yglesias approvingly tweeted it out, and FiveThirtyEight ran an article about it. For those who support increasing the refugee cap, it is something of a coup, as many judgments on refugees are made under the assumption that they will fare worse than other immigrants and cost a great deal in welfare because refugees tend to be relatively uneducated and unskilled.
But the finding is considerably weaker than it appears on first inspection. For starters, $21,000 over 20 years is not an enormous amount: In essence, it means that we just barely “break even” on the average refugee. And that’s if the figure itself is accurate, when in reality it is probably inflated. Evans and Fitzgerald tracked refugees who entered the U.S. between the ages of 18 and 45 for 20 years, so their study doesn’t capture the costs of Medicare and Social Security, a few years of which would easily negate the $21,000 that the average refugee contributes. Nor does it account for other costs, such as public education and incarceration.
All told, then, it is probably the case that the direct fiscal impact of refugees is neither particularly positive nor particularly negative. The data examined by Evans and Fitzgerald suggest that refugees are not, at least over the long-term, a particularly severe drain on the safety net, so fears that admitting more of them means risking a fiscal crisis are overblown. But they also indicate it is equally unlikely that an influx of refugees from the third world would alleviate the fiscal pressures exerted by an aging population.
There are, of course, other important questions that Evans and Fitzgerald don’t answer. They have nothing to say, for instance, on what the cultural impact of refugees will be, whether increasing the number of refugees will make more Americans vulnerable to jihadist violence, or whether an influx of men and women who are more likely to be employed and less likely to be incarcerated will revitalize American communities and improve local economies. These second-order issues will probably do much more in the end to determine whether America’s acceptance of refugees is worthwhile than the first-order matter of fiscal impact. Evans and Fitzgerald have given us some very useful information on the realities of refugee assimilation in America, information that should serve as a welcome antidote to the exaggerated prognostications of both camps in the American dialogue. But their study shouldn’t and won’t settle the debate over our refugee policy.
READ MORE: