Since the 2015 refugee crisis and the arrival of thousands of migrants on the Southern European coasts, there has been pressure on the European Commission and the most affected EU member states to find ways to effectively manage (and deter) migration. Aid is increasingly seen by policymakers as an essential part of a long-term strategy to tackle the “root causes” of migration—through the creation of job opportunities, quality education, and better public services. As a result, pledges to scale up aid to developing countries are now routinely accompanied by statements arguing that development gives their citizens an incentive to stay home.
In the past, donors generally responded to refugee movements by providing additional humanitarian assistance. More recently, however, the focus has shifted towards long-term development aid, which they hope would ultimately reduce the incentives for emigration. This is exemplified by the recent EU agreements with Lebanon, Jordan, and Turkey, the main countries of first asylum for Syrian refugees. Our own research shows that donors have not only changed their rhetoric, but also their behavior: Since the early 2000s, higher numbers of internally displaced persons (IDPs) as well as refugees in countries of first asylum have led to higher allocations of long-term development aid.
However, the impact of aid on migration is much less clear-cut than EU policymakers would like to believe. Rather, as we argue in a recently published paper, the aid-migration relationship depends on the channels through which aid gets distributed. Broadly speaking, so long as it is not completely wasted, foreign aid can raise individual incomes or improve other dimensions of well-being such as public services, or both at the same time. Previous research has shown that the probability of emigration falls with improved quality of local amenities such as health facilities, schools, and other institutions. Development aid might therefore reduce emigration from poorer countries through improved provision of public services.
But when aid primarily raises incomes—for example, when it gets funneled into jobs-creation programs -migration can be expected to increase at low development levels because more people can afford the costs of migrating. Only at much higher development levels do rising incomes provide an incentive to stay home; the potential income gains to be achieved abroad narrow down, while additional income is no longer required to make the financing of migration costs possible. Various studies show that the average would-be migrant has an incentive to stay at home if her country’s income per capita reaches 8000-10000 US Dollars. Income levels in the vast majority of aid-receiving countries rarely clear that threshold—that’s why modest increases in income are likely to keep prompting people to migrate. In a previous Refugees Deeply op-ed, Michael Clemens refers to this line of reasoning when arguing that aid-induced development will provide those who want to migrate with the necessary means.
Given that the effects of development aid on migration differ depending on whether aid improves individuals’ incomes or public services, our research explores the relevance of these two channels. We distinguish between early-impact and late-impact aid. Early-impact aid may lead to higher individual incomes in the short to medium term, say after 2-3 years. It includes, for example, support for agriculture (improved seeds, fertilizer etc.) and employment. Late-impact aid immediately affects the provision with public services but may lead to higher personal incomes only in the very long run, say after 10 years. Support for social infrastructure (schools, clinics etc.) is a typical example.
Using a sample of 25 donor and 129 recipient countries over the period 2004-2014, and controlling for a number of other determinants of migration choices, we find that a rise in late-impact aid—which brings more effective public services and governance—is associated with falling emigration rates. This is in line with expectations and similar in spirit to what Jonas Gamso and Farhod Yuldashev reported in another Refugees Deeply op-ed, namely that aid for governance has a deterrent effect on migration. Yet, our conclusion is much more general: The association between late-impact aid and reduced migration rates applies to a wide range of service improvements, from better schools to cleaner air and more reliable state institutions. In quantitative terms, the effect is small but still non-negligible: A 10 per cent increase in late-impact aid would on average lower the emigration rate by 1-1.5 per cent.
Our findings therefore support EU policymakers’ approach regarding development aid as an appropriate instrument to lower migration. But they may want to lower their expectations. It would take an unrealistic increase in development aid to deliver the reduced rates of migration they likely have in mind. According to our estimates, a doubling of late-impact aid would still only lower emigration rates by a fairly modest 10 to15 percent.
Moreover, the primary objective of aid should be to foster development in recipient countries. If income-generating projects such as providing improved seeds to farmers constitute a clear priority from a development perspective, it is hard to argue that they should not be realized because a small fraction of the beneficiaries might emigrate eventually. This leaves ample room for spending aid on projects that make sense from a developmental point of view and at the same time (modestly) deter migration.
Slightly revised version of an op-ed on Refugees Deeply of December 13, 2018, titled “The Complex Effects of Development Aid on Migration”.