Can market mechanisms solve the refugee crisis?

Abstract

Although the EU’s asylum system needs reform, there has not yet been much progress. Most proposals involve mandatory quotas, which distribute refugees according to GDP, population size, and other measures of reception capacity. More flexibility can be achieved through two market elements: tradable quotas and matching. The opportunity to trade quotas minimizes countries’ overall costs of providing asylum. The matching system improves refugees’ integration outcomes by respecting their preferences over host countries, and vice versa. Beyond the EU, the proposal can be applied to other international efforts, such as refugee resettlement via the UNHCR.