Citation

Discussion Paper Details

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Title: The Effects of Foreign Aid on Refugee Flows

Author(s): Axel Dreher, Andreas Fuchs and Sarah Langlotz

Publication Date: February 2018

Keyword(s): displaced people, foreign aid, humanitarian crises, migration, Official Development Assistance, Refugees and repatriation policies

Programme Area(s): Development Economics and Public Economics

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.

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Bibliographic Reference

Dreher, A, Fuchs, A and Langlotz, S. 2018. 'The Effects of Foreign Aid on Refugee Flows'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12741