News
The impact of big-boxes stores opening over the cities commerce, under analysis in the last INFO-IEB
Monday, 02 January 2017

 The IEB researcher Maria Sánchez-Vidal is the author of the last issue of INFO-IEB, entitled ‘Are big-box stores emptying the city centre?’, which analyses the impact of the opening of large malls over the stores in the cities centres.  

The text, based on the paper ‘Small shops for sale! The effects of big-box opening on grocery stores’, shows how the most affected sector by the opening of these malls is food. According to the study, between 20% and 30% of the stores located in the centre of cities disappear during the four years following the opening of a big-box.  

On the other hand, the same research show that 70% of local grocery stores closed were replaced by other small businesses. 

Download the last issue of INFO-IEB

 
The IEB researcher, Gianmarco Daniele, awarded the Juan de la Cierva fellowship
Monday, 12 December 2016

The IEB researcher Gianmarco Daniele has been one of the postdoctoral researchers who has won the Juan de la Cierva fellowship, which is granted every year by the Ministry of Economy and Competitiveness to promote research and the promotion of the projects of the new doctors . The duration of the scholarship is two years and has an endowment of € 25,000 for each of them.

Since Daniele started his work at the Faculty of Economics and Business of the UB and at the IEB in 2015, he has focused his research on the analysis of organized crime in Italy, the organization of political dynasties in municipal and state governments and in the relationship between family clans and social capital. Currently, Daniele investigates the system of the informal economy in India through the activity of street vendors. The Juan de la Cierva scholarship will serve to expand the field of research of the project.

 

 
How can we finance our pensions?
Thursday, 24 November 2016

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One in four people in Spain today are pensioners, and at the current rate of ageing this ratio is set to rise in the coming years. The pension system as it now operates will be unable to keep pace with this demographic change. In awareness of this, the Government has recently introduced two reform measures: the first, in 2011, gradually increased the retirement age from 65 to 67; and, the second, in 2013, introduced a new pension revaluation system. The Barcelona Institute of Economics (IEB) has published a new IEB Report entitled, “How can we finance our pensions?”, in which three experts analyze the consequences of these reforms and propose further reforms aimed at safeguarding the viability of Spain’s pension system.

The latest reform helps make the system more sustainable, but in a way that is inefficient and unjust since all the impact is borne by the pensioners. As soon as the European Central Bank achieves its target of 2% inflation, pensioners will lose 1.75% of their purchasing power each year. That is, with this mechanism, the current system provides a pension with a declining purchasing power over time, so that 20 years after retirement a pensioner will be able to buy between 30 and 40% fewer goods and services than in the year they retired", warns José Ignacio Conde-Ruiz, Professor of Foundations of Economic Analysis at the Universidad Complutense de Madrid and Deputy Director of the Fundación de Estudios de Economía Aplicada (FEDEA).  

Boulhol and Reilly, OECD economists and experts in pensions, outline in their contribution to the IEB report the two most frequently adopted systems for financing pensions: the redistributive model, which guarantees the same minimum pension – or ‘first tier’ pension – to any person over a certain age and which is usually supplemented with private pension schemes; and, the contributory model (the one applied in Spain), in which the pension an individual receives depends on the contributions they have made to the system.

 

In his article, José María Durán-Cabré, IEB researcher, notes that when a contributory system, such as the one operated in Spain, runs up a deficit, there are two possible courses of action, depending on the nature of the deficit. “If it is transitory – the result of the economic cycle, then the deficit has to be financed from the surplus accumulated in the expansion phase of the cycle. In Spain, for example, the Social Security Reserve Fund reached almost 66 billion euros in 2011, but by July of this year the figure had fallen to 25 billion. On the other hand, if the deficit is structural, then the contribution-benefit nexus and pension funding have to be reformed”.

 

How can pension revenues be increased in the Spanish system?

In the light of the unsustainability of the pension system in the long term, political parties and social agents have raised the possibility of seeking alternative ways of increasing the funds in the so-called “pensions piggy bank”. In their contributions to the IEB Report, the experts reflect on some of these:

 

Financing part of the pension fund out of tax revenues, such as VAT. This is a measure that political parties and social agents in Spain have studied. However, Conde-Ruiz considers that it does not make much sense if the intention is to maintain the contributory nature of the Spanish pension system. “A contributory pension system ensures that the size of the pension received by the worker depends on the contributions made throughout their working life. In other words, if a worker makes no contributions, they receive no pension, and if the worker contributes little, their pension is low. If a fiscal devaluation is undertaken so that social security contributions are replaced by VAT revenue, what we are in effect doing is funding part of the contributory pensions with VAT. But this breaks with the contributory principle, since a person who has not worked long enough and is not entitled to a contributory pension might claim a pension on the grounds that they are in fact contributing to the pension system via the payment of VAT when they consume”, he points out.

Increasing contributions.Firms typically pay around 30% for social security contributions and workers pay a further 6.35%. These contributions are far and away the largest “tax” in Spain, representing almost 35% of total tax revenues. They represent 11.4% of GDP, half a percentage point more than the EU-15 average”, Duran-Cabré stresses. In view of these figures, it seems unlikely that Spanish society would accept this solution.

Adopting a redistributive system. The state would thereby provide the same minimum pension to all, which would mean dismantling the current system and equalizing all pensions. In this way, pensions would fall markedly and become a subsistence benefit.

 

Among the alternatives for increasing revenues, Conde-Ruiz suggests an intermediate path: switching widowhood pensions to the redistributive system, and so freeing up more resources for contributory pensions. “This path would, in fact, be in line with the full financing of non-contributory universal benefits to be paid for through general revenues. And social security contributions, in keeping with the contributory nature of the Spanish system, would serve solely to finance contributory pensions”, concludes Durán-Cabré in the IEB Report. However, he warns that the cost of these pensions (around 21,000 million euros) would mean an increase in the expenditure that has to be financed by the tax system.

 
The IEB launches the Autonomous Community Financing Map
Monday, 07 November 2016

This Monday, the Barcelona Institute of Economics (IEB) published the first edition of the Autonomous Community Financing Map. This infographic map shows how the current autonomous financing system has affected each autonomous community from its introduction in 2009 to 2014, the year for which latest published data are available. By monitoring the three steps taken by the system – taxes ceded prior to equalisation, application of the equalisation mechanism (guarantee fund for essential public services) and the application of three adjustment funds (global sufficiency, competitiveness and cooperation)- the map illustrates the changes in the resources per capita available to each community as different funds have been incorporated into the system.

According to the results for 2014, the three communities losing most resources due to the incorporation of new funds into the financing model are the Community of Madrid, the Balearic Islands and Catalonia. Before the application of the equalisation mechanism and the system’s other funds, Madrid would have received €2,935 per capita from tax revenues. However, after the application of all the funds, Madrid lost 24.26% of this available revenue, leaving it with €2,223 per capita (adjusted). Likewise, the tax revenues received by the Balearic Islands fell from €2,464 to €2,232 per capita, that is, down by 9.42%, while those received by Catalonia fell from €2,449 to €2,221 per capita, a drop of 9.31%, after the incorporation of all the funds in the model.

Indeed, these three communities, along with the Community of Valencia, are the only ones that began with more tax resources than the state average (€2,332 per capita), but which now, following the application of the system, find themselves with less resources than average. In Madrid and Catalonia this situation has repeated itself since 2012 and in the Balearic Islands and Valencia since 2013.


Cantabria, La Rioja and Extremadura: the communities with the most resources

At the other end of the scale we find Cantabria, La Rioja and Extremadura: the autonomous communities with the most resources after the application of the equalisation mechanisms and the adjustment funds. In 2014, Cantabria was the autonomous community with the most resources per capita, with a 23.40% rise (enjoying an increase from €2,308 to €2,848 per capita). In fact, Cantabria has occupied this position since the current financing system was first introduced. La Rioja initially received €2,076 per capita, but this figure rose to €2,687 after the changes in the financing system: an increase of 29.43%.

Extremadura is the community that has benefitted most from the application of the current autonomous financing system. Its available tax resources are up 73.73% from an initial €1,454 to €2,526 per capita following the application of the equalisation mechanism and adjustment funds. In 2014, together with Castilla-La Mancha, Galicia and Castilla y León, these were the only communities that began with less tax resources than the state average, but which now, at the end of the process, find themselves with more resources than average.

“When the model’s equalisation mechanisms are applied, the gap between the richest and poorest communities is narrowed, but in no case do those with more resources end up below the state average. The problem arises when the sufficiency, competitiveness and cooperation adjustment funds are introduced, as these distort the pattern of redistribution, overriding the principle of equity that is at the heart of the model, and creating a system that generates erratic outcomes that are hard to justify”, explained IEB researcher, Maite Vilalta.

A flexible tool of analysis

With the presentation of the Autonomous Community Financing Map, the IEB provides a tool for consulting and analysing the effects of the autonomous financing model, which has been in operation in Spain since 2009. Via the different sections of the website, the user can consult the amount of tax revenues ceded by the central government to each autonomous community, the amount of resources each community receives by participating in the equalisation mechanism (guarantee fund for essential public services) and the amount each obtains from the model’s adjustment funds (sufficiency, competitiveness and cooperation funds).

“The Autonomous Community Financing Map will be updated each year as data become available. The aim is to provide an overview of how the current financing system impacts the resources available to each autonomous community, and to promote debate on reforming the model”, explained IEB Director, Martí Parellada, who also highlighted the past role of the institution in the analysis and study of fiscal federalism.

 
'De nuestros impuestos y su administración' guanya el premi Joan Sardà Dexeus
Thursday, 03 November 2016

El llibre 'De nuestros impuestos y su administración', dirigit per José María Durán i Alejandro Esteller, ha guanyat el premi Joan Sardà Dexeus al treball de més rellevància en l'àmbit de l'economia i l'empresa del darrer any. L'obra recull les contribucions dels acadèmics, responsables de l'administració i professionals de la fiscalitat que van participar en el Fòrum Fiscal 2.0, que va organitzar el IEB amb l'objectiu d'analitzar el funcionament de l’administració fiscal espanyola.

Al llarg de tres capítols -estructurats de forma dual (plantejament i discussió)- s'intenta esbrinar com s'hauria d'adaptar l'administració fiscal espanyola per ser més justa i eficiente. En la cerca de la resposta, es posen sobre la taula preguntes com quin model d'administració fiscal dels països desenvolupats s'adequaria millor al sistema espanyol, o quines eines podrien ser útils per evitar el frau fiscal.

Reflexionen sobre aquests temes José María Durán, Alejandro Esteller, Joel Slemrod, Jonathan Leigh Pemberton, Josep Costa i Solà, Joan Iglesias i Jorge Onrubia.

Aquest llibre forma part de la nova col·lecció Economia UB d'Edicions de la Universitat de Barcelona, nascuda amb l’objectiu d’incidir en les qüestions fonamentals del debat econòmic actual des de la universitat.

El premi Joan Sardà Dexeus
El guardó, convocat per la Revista Econòmica de Catalunya i atorgat pel Col·legi d'Economistes, es va lliurer el passat 27 d'octubre en el decurs del Sopar dels Economistes. Aquest premi, que també es concedeix a les millors trajectòries professionals en la difusió de l’economia, porta el nom de l’eminent economista Joan Sardà Dexeus (1910-1985), i en edicions anteriors l’han rebut economistes com ara Francesc Cabana, Jordi Maluquer, Guillem López Casanovas, Germà Bel, Antoni Serra Ramoneda, o Núria Bosch, entre d’altres.

 

 
Pierre Magontier and Kinga Tchorzewska, new IEB PhD students
Monday, 24 October 2016

 The IEB counts with two new PhD students: the French Pierre Magontier and the polish Kinga Tchorzewska. Magontier holds a degree in Political Science and obtained a Master in Economics at the Université Catholique de Louvain, with his thesis on migration as a result of climate, urbanization and growth. During his time at the IEB, he will focus his research on the following lines: urban economics, public economics, environmental economics, growth theory and dynamics of migration.

Tchorzewska, meanwhile, has a degree in Economics from the University of Edinburgh and obtained a Master in Economics and Finance at the University Pompeu Fabra. It has also been research assistant at IESE Business School and a fellow in the department of international cooperation of the Ministry of Foreign Affairs of the Polish government. Currently she focus her research on the following lines: energy economics, public economics and development economics.

 
The researcher in the economics of education, Zelda Brutti, joins the IEB
Monday, 17 October 2016

 The postdoctoral researcher, Zelda Bruttih, has recently joined the team or researchers of the IEB. The italian researcher has a PhD in economics from the European University Institute in Florence and has focused his research on the economics of education and development. Some of his previous research topics have been focused on the mixed results of decentralizing public education and the effects of the brothers in cognitive performance, among others.

During his time at the IEB, says the researcher, she will get dipper on the study of the quality of teaching and will initiate new projects to see what is the relationship between the geographic distribution of teachers and educational inequality, and to analyze the effects of the Bologna plan in the labor market.

 

 
 
The IEB opens a new course with the 'VII Workshop on Economics of Education'
Monday, 19 September 2016

"Evaluation of education and training policies'. This was the title of 'VII Workshop on Economics of Education' organized by the IEB, together with the University of Barcelona (UB) and the Xarxa de Referència en Economia Aplicada, which was held earlier this month at the faculty Economics of the UB. For two days, researchers presented their work focused on the evaluation of public policies on education and its impact in terms of results and innovation. 

The researchers of IEB, Oriol Escardíbul and Jorge Calero, were the coordinators of the event  and presented the 10 papers that were discussed during the two days of the Workshop.

The event also featured two first class guests: the researchers from the University of Bristol, Simon Burgess, who presented the lecture "Using Behavior Incentives to Improve Performance on High Stakes Tests: Evidence from a Field Experiment" and the professor at the University of Milan, Massimiliano Bratti, author of the paper "the Importance of Being 'Right on track': Wrong Choice and Upper Secondary School Grade Retention track."

 
The IEB researcher, Amedeo Piolatto, has been awarded with the Fundació BBVA funding to study the impact of the aggregators on the markets
Friday, 09 September 2016

 The IEB researcher, Amedeo Piolatto, will be one of the 60 benefits of the BBVA Foundation funding dedicated to research, with an investment of up to 40.000 € per project. The budget will be used to study the impact of web aggregators on digital business, consumer welfare and price change on markets.

In his presentation of the research, Piolatto relates how the new engines “allow gather information and disseminate it among the economic agents, even personalized, reducing search costs”. These aggregators improve the results of research, but the impact of their use is still uncertain and is unclear whether these markets should be regulated.

 
The tax rate on multinationals in the EU has fallen from 30% to 19% in the last two decades
Thursday, 21 July 2016

 - The IEB analyses the evolution of corporate taxes in Europe in its latest IEB Report
- Across Europe there is a huge disparity in corporate tax rates, with some countries charging a statutory rate of 10% and others 35%
- Annual losses attributed to tax avoidance strategies are calculated at between 100 and 240 billion dollars

 

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The Barcelona Institute of Economics (IEB) has published a new IEB Report, entitled “Taxation, multinationals and foreign direct investment”, in which it analyses the multinational taxation policy of the Member States of the European Union – a policy issue which, as IEB researcher Jordi Jofre-Monseny reminds us in his introduction, “has become an issue of broad social concern”, because of such cases as Apple, Google and Amazon, who “pay surprisingly low tax bills in Spain”. The absence of a single tax has brought about this situation; yet, despite the disparity in the tax rates applied in each country, the overall trend had been to reduce the tax burden on businesses. The economist Valeria Merlo (University of Tübingen) points out in her contribution that “the average statutory corporate tax rate has fallen from 30% in 1996 to 19% in 2014”.

The researcher believes that this downward trend “reflects the attempt of national governments to remain competitive in a context of increased mobility of capital and globalization of multinationals”.

National government policy has brought about a reduction of 11 points in the tax rate over the last 20 years, but at the same time the large differences between the rates fixed in each country have been maintained. “While multinationals face statutory tax rates of 10% and 12.5% in Bulgaria and Ireland, respectively, income is taxed at 35% in Malta and at 33% in France,” Merlo explains (see accompanying figure at the end of this press release).

These differences favour the profit shifting practices of big business that result in “low overall effective tax payments of multinationals (…) at the cost of countries’ tax revenues”. These avoidance strategies have an impact on the amount of corporate taxation being collected. Annual losses are estimated at between 4% and 10%, which represents between 100 and 240 billion dollars a year in uncollected taxes.

 


Reasons for disparity in tax rates

In his contribution to the report, Simon Loretz, researcher at the Institute for Advanced Studies, analyses the tax rates being paid by multinationals. In relation to the preferential treatment being offered, he explains that the countries of the EU can no longer openly offer “preferential tax deals to foreign companies”, but that they can make changes in the way they define their tax bases so that the tax burden on highly mobile firms is lower. These measures, however, have no repercussions on immobile domestic enterprises, with few options of opening up new markets abroad, and who continue having to pay higher tax rates.

Loretz believes that maintaining preferential treatment for high-profitability firms “may be optimal in a situation with high tax burden” but when the tax burden is low any further preferential treatment can result in inefficiency and “harmful competition”.

 

The US Model

The IEB Report also includes a contribution from Daniel J. Wilson, researcher at the Federal Reserve Bank of San Francisco, who analyses how big businesses in the US are taxed. Wilson reminds us that “business tax policies vary tremendously across states”. The first difference concerns the criteria applied to firms with a presence in several states through their subsidiaries. “Some states require each subsidiary with a presence in their state to file a separate tax return and pay taxes on the subsidiary’s taxable profits. Other states require the corporate group to file a single return (…) and other states give corporations the option to file either separate subsidiary returns or a combined return.”

Whatever the criteria applied, the firm ends up apportioning a share of its total business income to the states in which it has a presence in accordance with its “apportionment formula”, calculated as a weighted average of the corporation’s payroll, property and sales in each state.

Tax policies, together with deductions targeting specific business activities, like research, and other tax credits, are critical in the geographical distribution of firms in the United States. Here, Wilson asks whether the system generates an optimal allocation. “The variation across states in business tax burdens causes a suboptimal spatial allocation of business activity (…) a revenue-neutral harmonization of state business tax policy would raise both national GDP and welfare by nearly 1%”, he concludes.

 
Leonzio Rizzo analyzes the double-ballot electoral system in the last INFO IEB
Thursday, 14 July 2016

 Italy it's one of the last countries to incorporate the double-ballot electoral system for its municipal elections. A model already used by countries such as France, Portugal, Finland and Brazil in its presidentials and that has effects not only on the results of the elections, but also in public spending. This is what emerges from the study made by the IEB researcher, Leonzio Rizzo. In his search, Rizzo has assessed the economic impact of model released in Italy, known as italicum.

The peculiarity of the Italian system is that municipalities with more than 15,000 inhabitants work with the double-ballot majority system, while fewer than 15,000 inhabitants do a single round system in which the mayor can only receive the support of one list, which "allows to analyze the impact of the double-ballot about fiscal policy."

"The municipalities with a double-ballot have lower total revenues and current expenditure per capita," says Rizzo. The effect is multiplied if the mayor has the support of a single list and, therefore, has a strong position in the government. In this context, the current cost 44.41 euros per capita is less than a single lap system, which is 7% less than current spending. The difference decreases as the mayor needs more support.

"The result indicates that a simple majority double-ballot electoral system can lead to lower taxes and spending, but if fragmentation is high political the differences fade."

 

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Agglomeration economies and population distribution, main topics at the IV Workshop on Urban Economics
Tuesday, 28 June 2016

 The Faculty of Economics of the University of Barcelona (UB) hosted the IV Workshop on Urban Economics which was the platform for the presentation of more than 30 research on urban economy. During two days, the speakers presented their conclusions on studies on issues such as agglomeration economies, transport, population segregation by neighborhood or design of evaluation systems of public policies.

The Workshop was attended by frontline researchers, such as Professor Enrico Moretti, of the University of California Berkeley, who closed the workshop with the lecture "Why Do Cities Matter? Local Growth and Aggregate Growth". Moretti is one of the most prominent researchers on urban economy at present, thanks to his work to show how geography and dynamics of cities are crucial for understanding the evolution of the labor market.

The meeting was also attended by researchers Jacques-François Thisse, Université Catholique de Louvain, and Matthew Turner at Brown Univeristy, who offered the presentations "Monopolistic Competition Without Apology" and "Subways and Urban Growth: Evidence from Earth".

The images of the event are available on the Flickr of the IEB.

 

 
The IEB held the first Summer School in Urban Economics
Tuesday, 21 June 2016

 The Institute of Economics of Barcelona held from June 15th to 17h, the first Summer School in Urban Economics, in collaboration with the Urban Economics Association and the Smart Cities chair. The program is intended to provide PhD students with interest in urban policy a project to expand their field of knowledge and to present their research and evaluate some of the most prominent specialists in the academic field.

This first meeting was attended by researchers Pierre-Philippe Combes (Aix-Marseille School of Economics), Henry Overman (London School of Economics), Diego Puga (CEMFI) Kurt Schmidheiny (University of Basel), Jacques Thisse (Université Catholique de Louvain ) and Matthew Turner (Brown University).

During the three days, the speakers presented their research on urban structures, taxation, competition, transport, and other political assessment in front of an audience composed by 33 doctoral students.

You can see some images of the event at the IEB Flickr.

 
The IEB will host the IV Workshop on Urban Economics, with the researchers Enrico Moretti, Jaques-François Thisee and Matthew Turner
Tuesday, 07 June 2016

The Institute of Economics of Barcelona (IEB) will host, from June 13th to 14th, the IV Workshop on Urban Economics, one of the main activities of the institution during the ayer and that, once again, will reveal original research about the evolution of urban environments and their challenges. 

The meeting will be attended by top researchers, such as the professor of Economics at the University of California Berkeley, Enrico Moretti, known for his book "The New Geography of Jobs", on which he studied how labor dynamics can be the key for the development of cities. His work had a great impact, with presence in media such as The New York Times, The Wall Street Journal, Forbes and The Economist, among many others. 

The Workshop will also be attended by the professor of the Université Catholique de Louvain, Jacques-François Thisse, a specialist in economic geography, and Matthew Turner, from the Brown University, who has focused his research on urban development.  

 
The arrival of refugees has lowered consumer prices by 2.5% in the host areas of southeast Turkey
Wednesday, 11 May 2016

 - The IEB analyses the economic impact of the massive arrival of immigrants in Europe since the outbreak of war in Syria.
- The arrival of refugees in the areas of greatest influx (Turkey, Lebanon and Jordan) has had an impact on both labour markets and the distribution of the native population in the cities of these countries.

 

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The Institute of Economics of Barcelona (IEB) at the University of Barcelona (UB) has published a report entitled “Economic considerations of the refugee crisis in Europe”, the latest edition of its IEB Report, in which it analyses the economic impact of the arrival of refugees who have been living on the continent since 2011, following the outbreak of the war in Syria. The study quantifies the impact on consumer prices, on the labour market, as well as the effects on the price of rental housing in the refugee-hosting areas (the cities of southeast Turkey).

In one of the chapters of the Report, Semih Tumen, a researcher from the Central Bank of Turkey, writes that a total of 1.2 million refugees registered in Turkey between 2011 and 2014. Today, this figure reaches 2.7 million if we also include the unregistered population. The impact of their arrival has been particularly visible in the cities in the southeast of the country, especially in Kilis, Hatay, Gaziantep, Sanliurfa and Mardin, where the refugees represent more than 10% of the population and, in cases such as Kilis, where they reach 38%.

One of the consequences described by Tumen is the fall in consumer prices. He estimates a drop in the CPI of 2.5% in these host cities, both in goods and services. This fall is directly related to the massive influx of refugees onto the informal labour market, which is highly developed in Turkey. According to the researcher’s figures, 60% of refugees are of working age, which means the arrival of these refugees has increased the number of potential informal workers. Moreover, they are willing to work for lower wages than those paid to the native population. In fact, the fall in prices in those sectors using informal labour reached 4%, while in sectors with a lower presence of informality prices remained stable.

While these figures represent a “positive effect on native welfare”, they also mean a reduction in the employment opportunities of the local population in the informal sector. The researcher reports that the employment rate among the Turkish population in this market has fallen by 2.2% in these years. Of this number, half today are inactive, while 32% find themselves out of work and 18% have found jobs in the formal market. A large part of this native population that has been pushed out of the informal market is of school age, which accounts for the increase in enrolment in secondary schools and universities in the area in recent years.

Finally, Tumen analyses the changes generated by the arrival of refugees in southern Turkey in the housing market. The report highlights that the price of rental housing has risen, on average, by 5.5% in the area, although the rents of poor quality housing have only risen by 1.7%, while those of high quality have gone up by 11%. The researcher links these trends to the exodus of natives from those neighbourhoods where the refugees settle, as they seek areas that they consider to be better and safer.

 

Different political responses

The IEB Report also analyses the political response from Europe to the refugee crisis. “The situation has served to highlight the major political differences that exist between the Member States of the European Union, providing evidence of the markedly antagonistic stances adopted with regard to reception policy”, explains IEB researcher, Javier Vázquez-Grenno in his introductory article. Thus, in countries like Bulgaria, Denmark, the Netherlands and Sweden the acceptance rate for asylum applications is between 70 and 90%, while in Poland, Hungary and Latvia the rejection rate exceeds 80%.

The escalation of the war in Syria in 2015 caused the largest refugee crisis in Europe since the Second World War, leading the European Commission to activate the European Agenda on Migration. This comprises various formulae for resettling applicants based on such criteria as the size of the population, total GDP, the unemployment rate and the number of asylum applications received in the previous four years. “This is a good first step, but the system needs to be accompanied by two additional measures: the effective distribution of costs and the taking into account of the applicants’ preferences regarding the country they wish to be resettled in”, concludes Jesús Fernández-Huertas Moraga, professor at the Universidad Carlos III in Madrid.

The researcher believes that this method could be applied by the European Commission in three stages: stage one, the “initial quota determination”, would treat refugees as an international public good, so that the responsibility for maintaining the applicants would not fall solely on the host country and would ensure an equitable distribution of the potential costs of reception; stage two, the “compensation mechanism”, would involve negotiations between the host countries for which the arrival of refugees represents a high marginal cost and those which could meet their quotas with a low marginal cost; and, stage three, the “matching mechanism”, in which the refugees could rank possible destinations in order of preference. This would not mean that all applicants would end up in their first-choice destination, but that this criterion would form part of the algorithms used for their resettlement.

Despite the debates concerning the best method to employ and taking into account the economic outcomes of the study, the researchers agree that “in the European case, the effort should not be that great for an EU population of more than 500 million, given that the number of potential refugees is unlikely to exceed 4 million”, as Vázquez-Greeno points out. A “derisory” figure compared with the numbers handled by countries like Turkey, Lebanon or Jordan, with 2.7 million, 1.1 million and 640,000 refugees, respectively.

Danish precedents

The IEB Report includes the contributions of two researchers, Anna Piil (Aarhus University) and Kristine Vasiljeva (KRAKA), who analyse the way the government of Denmark managed the arrival of more than 76,000 refugees between 1986 and 1998. “The first objective was to disperse immigrants across the country’s regions and municipalities in proportion to the number of native inhabitants and, then, to grant the refugees asylum”, they report. This meant that many of the new refugees began their integration in municipalities with low rates of unemployment and a low concentration of immigrants, which accelerated their entry into the labour market.

However, the statistics show that 26% of non-Western immigrants found their last job thanks to their network of personal contacts, above all from other immigrants. “Their success in the labour market does not depend on their Danish qualifications; rather, it depends on their proximity to compatriots that enjoy a relatively high standing. This

can be explained in terms of the relative absence of communication between refugees/ immigrants and natives due, among other factors, to cultural and language barriers”, explain the researchers.

Moreover, between 1986 and 1998 Denmark allowed the refugees to leave the municipality to which they had been assigned, with the result that, in a period of ten years after obtaining asylum, 50% of immigrants had moved from rural areas to bigger cities and lived in neighbourhoods with a higher density of immigrants.

 
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