The Effects of Foreign Aid on Refugee Flows

50 Pages Posted: 26 Feb 2018

See all articles by Axel Dreher

Axel Dreher

Heidelberg University

Andreas Fuchs

Helmut Schmidt University Hamburg; Kiel Institute for the World Economy

Sarah Langlotz

Heidelberg University

Multiple version iconThere are 2 versions of this paper

Date Written: February 2018

Abstract

This article is the first to systematically study whether foreign aid affects the net flows of refugees from recipient countries. Combining refugee data on 141 origin countries over the 1976-2013 period with bilateral Official Development Assistance data, we estimate the causal effects of a country's aid receipts on both total refugee flows to the world and flows to donor countries. The interaction of donor-government fractionalization and a recipient country's probability of receiving aid provides a powerful and excludable instrumental variable, when we control for country- and time-fixed effects that capture the levels of the interacted variables. Although our results suggest that exogenous aid induces recipient governments to encourage the return of their citizens, we find no evidence that aid reduces worldwide refugee outflows or flows to donor countries in the short term. However, we observe long-run effects after four three-year periods, which appear to be driven by lagged positive effects of aid on growth.

Keywords: displaced people, foreign aid, humanitarian crises, migration, Official Development Assistance, Refugees, repatriation policies

JEL Classification: F22, F35, F59, H84, O15, O19

Suggested Citation

Dreher, Axel and Fuchs, Andreas and Langlotz, Sarah, The Effects of Foreign Aid on Refugee Flows (February 2018). CEPR Discussion Paper No. DP12741. Available at SSRN: https://ssrn.com/abstract=3130180

Axel Dreher (Contact Author)

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117
Germany

HOME PAGE: http://www.axel-dreher.de

Andreas Fuchs

Helmut Schmidt University Hamburg ( email )

Holstenhofweg 85
Hamburg, 22043
Germany

Kiel Institute for the World Economy ( email )

Kiellinie 66
Kiel, Schleswig-Hosltein 24105
Germany

Sarah Langlotz

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117
Germany

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