Matching refugees to countries by Jesús Fernández-Huertas Moraga and Martin Hagen

 From the IZA World of Labor:

Can market mechanisms solve the refugee crisis? The combination of tradable quotas and matching would benefit host countries as well as refugees  by Jesús Fernández-Huertas Moraga and Martin Hagen

"Ever since the major inflow of refugees (the “refugee crisis”) in 2015 and 2016, there has been heated debate about the appropriate distribution of refugees in the EU. Current policies revolve around mandatory quotas, which disregard the preferences of EU members and refugees alike. This problem can be addressed with two market mechanisms. First, tradable quotas minimize the cost of asylum provision for host countries. Second, a matching system gives refugees more discretion over where they are sheltered. While this proposal is theoretically appealing, it has yet to be tested in practice."

"A vivid demonstration of free riding was the EU's response to the upsurge in irregular migration in 2015 and 2016. In each of the two years, the EU registered more than one million asylum applicants, mostly from Syria, Afghanistan, and Iraq. Their main points of entry into the EU were Greece and Italy, whose reception facilities were quickly overwhelmed. Other EU members showed little willingness to help them out. As refugees tried to make their way toward Western and Northern Europe, several states reacted with border closures. Hungary, Slovenia, and Austria, among others, even erected fences to keep asylum seekers from entering their territories.

"To tackle the escalating situation, the European Commission launched the European Agenda on Migration in May 2015 [1]. One of its main components was an emergency mechanism to relocate 160,000 asylum seekers from Greece and Italy to the rest of the EU. A distribution key specified a quota of refugees for each EU member, based on measures of reception capacity (mainly GDP and population size). For each relocated person, the receiving country was financially compensated with €6,000 from the EU budget. Several Eastern European countries staunchly opposed the mandatory quotas but were overruled in the Council. Partly reflecting their reluctance, only about 35,000 refugees were eventually relocated.

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"How the mechanism works in detail

"The proposal can be divided into three stages: an initial allocation of quotas, a market for these quotas, and a matching system.

"Stage 1: Initial allocation of quotas

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"Stage 2: Quota trading

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"Stage 3: Matching refugees to countries

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"In the final decision adopted by the Council, the Parliament's proposal was redacted to a one-sided matching mechanism that gave countries the possibility to express their preferences over refugees but not vice versa. Both on paper and in practice, the matching procedure was rather ad-hoc. A more systematic approach that incorporates insights from matching theory can improve the outcomes for refugees and countries alike.

"As envisioned by the European Parliament, a two-sided matching mechanism would allow refugees to rank EU members from most preferred to least preferred. Conversely, countries would rank different types of refugees, stratified according to family ties, language skills, education levels, and so on. This information would be collected and fed into a centralized algorithm, which would return an assignment of refugees to countries."