Tradable Refugee-admission Quotas: A Policy Proposal to Reform the EU Asylum policy

The current refugee crisis is putting EU policies and institutions dealing with refugees and asylum seekers under heavy pressure to reform. The emergency humanitarian situation and the sheer volumes involved act as stress-tests for the Common European Asylum System (CEAS). It is fair to say that the existing system has not been up to the mark. Its weaknesses and inefficiencies have been much criticized (see De Bruycker et al., 2010); at the same time, the pressure to “do something” generates frantic policy experimentation, with a succession of spectacular but often short-lived initiatives (such as the “Mare Nostrum” operation). On the positive side, the current crisis is also an opportunity to rethink EU asylum policy afresh.

The policy proposal outlined in this note is part of just such a reflection. It builds on well-established models in public economics (markets for tradable quotas) and on recent theoretical contributions in the field of mechanism design (the “matching” component in what follows): the kinds that have been successfully applied to issues as diverse as pollution, kidney transplants, or to the allocation of students to schools, colleges and hospitals.[1] We believe that with some adaptation, these tools can also be applied to improve the EU’s asylum and refugee-admission policy in terms both of efficiency and equity.

In our working paper (Rapoport and Fernandez-Huertas Moraga, 2014), we set out a “tradable refugee-admission quotas system with matching” in four steps. First, we start by documenting the general recognition in both academic and policy circles for the need to reform the CEAS and the need to structure EU asylum policy reform around a number of core legal and institutional principles. These include effective refugee protection and fair burden – or responsibility – sharing. Regarding the latter, we recall the findings of studies (notably Hatton, 2012, and Thielemann et al., 2010) suggesting that based on “equal burden sharing” (assessed by a “combined capacity index”), more than one third of the asylum seekers currently within the EU borders should be transferred to other countries within the EU.

Second, we detail the two components of our proposed mechanism, which are borrowed from a broader scheme developed in Fernandez-Huertas Moraga and Rapoport (2014). The first component is the tradable quota system. Its principle is to determine a total number of asylum seekers/refugees to be hosted by the EU and a distribution of initial quotas across countries. We are agnostic with respect to the total number and the initial allocation, which could be done according to population, GDP, or more sophisticated rules such as the “combined capacity index” mentioned above. These issues must be addressed in any solidarity mechanism, not just ours. The advantage of a tradable quota system, however, is that it allows for revealing information on the true costs of accommodating refugees in the participating countries, and it allows countries to exploit their comparative advantages in either “hosting” or “funding”. In other words, there are two ways by which countries can contribute to the public good “international protection of refugees”: through visas, or through money. The market for admissions will allocate refugees so that the marginal cost of hosting them is equalized across destinations. The solution is efficient in that it minimizes the total cost (or, for a given total cost, allows for the accommodation of more refugees).

The second component is the matching mechanism, whereby each candidate refugee (e.g. an asylum seeker, or a refugee applying for resettlement within the EU) is asked to rank his or her preferred destinations. This means that they would prefer to be resettled in that destination (or have their asylum request examined there) rather than remaining in their current situation. Candidate refugees are then ranked in a random order, with the first in line granted their first choice, the second in line their first choice etc., until we have to go down the list as preferred destinations gradually fill up. At the same time, EU hosting countries also express their preferences, this time vis-à-vis the “type” of refugees they would like to host. For example, countries can express preferences according to the skill or education level of the refugees, their nationality, family status, or legal status (e.g., asylum-seekers vs. refugees applying for resettlement). This is done by “bidding” for certain types as part of the country’s quota. If all countries have the same preferences, the result will be equivalent to a case where they are indifferent with respect to refugee type. If countries have diverging preferences, then allowing them to express these preferences will reduce the expected cost of the system.

Overall, the combination of these two elements – the tradable quotas system and the matching mechanism – results in a policy tool that has lots of theoretical advantages: cost-efficiency, incentive compatibility,[2] and fairness in cost-sharing and in refugees’ allocation. But could it work in the real world? To try to assess this, we conclude with a discussion of the properties of the proposed tool against the background of the EUREMA (European Relocation from Malta) Program. This program took place in 2011-12 and allowed for the relocation of about 500 refugees and asylum seekers in 15 participating countries. The selection of potential beneficiaries that were relocated was made in two steps: UNHCR first stepped in through a registration exercise, and then participating countries sent missions to Malta to make the final selection.

Importantly from our perspective, the program was evaluated by the European Asylum Support Office (EASO, 2012). The evaluation report reveals important information about the conception and execution of the program. First, it is clear that a lot of attention was paid to the selection criteria and demands emanating from participating countries, but that candidate refugees’ preferences over destinations were largely neglected. This led to long delays, friction and inefficiency.

Second, the report listed a series of problems identified by the participating countries, including: delays in the identification of candidate refugees genuinely interested in relocation; lack of overlap between the participating States’ selection criteria and refugee profiles; troubles in assessing the willingness and suitability of potential beneficiaries to being relocated; unclear criteria concerning relatives and family reunification;[3] and lack of will by some candidates to commit to relocation offers by new EU Member States where there are few migrant communities.

As explained above, a tradable quotas system (with a matching mechanism) is precisely designed to address these problems.

This blog post is based on the new EUI Working paper “Tradable Refugee-admission Quotas: A Policy Proposal to Reform the EU Asylum Policy” (Hillel Rapoport and Jesus Fernandez-Huertas Moraga).

Hillel Rapoport is Part-time Professor at the Migration Policy Centre and Professor of Economics at the Paris School of Economics, University Paris 1 Pantheon-Sorbonne.

The views expressed by the author are not necessarily the views of the Migration Policy Centre.

References

De Bruycker et al (2010): Setting up a Common European Asylum System: Report on the application of existing instruments and proposal for the new system, Luxembourg: Publications Office of the European Union.

European Asylum Support Office (2012): EASO fact finding report on intra-EU relocation activities from Malta. Retrieved from http://easo.europa.eu, July 2012.

Fernández-Huertas Moraga, J. and H. Rapoport (2014): Tradable Immigration Quotas, Journal of Public Economics 115: 94-108.

Hatton, T.J. (2012): Asylum Policy in the EU: the case for deeper integration, Norface Migration Discussion Paper No. 2012-16.

Rapoport, H. and J. Fernandez-Huertas Moraga (2014): Tradable Refugee-admission Quotas: a Policy Proposal to Reform the EU Asylum Policy, EUI Working Paper RSCAS 2014/101.

Roth, A. E. (2002): The Economist as an Engineer: Game Theory, Experimental Economics and Computation as Tools of Design Economics, Econometrica, 70 (4): 1341-1378.

Thielemann, E.; R. Williams; C. Boswell; and Matrix Insight Ltd. (2010): What system of burden-sharing between Member States for the reception of asylum seekers?. Study. Directorate General for Internal Policies, Policy Department C: Citizens’ Rights and Constitutional Affairs, Civil Liberties, Justice and Home Affairs, European Parliament, Brussels.