The Economics of International Refugee Law

We model the evolution of international refugee law and analyze reform proposals. We show that the 1951 Convention Relating to the Status of Refugees can be understood as an agreement among states to supply the global public good of refugee protection but that the increase in economic migration has led states to shade on their obligations under the convention. Furthermore, one state shading on its obligations strengthens incentives for other states to shade, potentially creating multiple equilibria. Under the open-ended nonrefoulement norm of the convention, reforms that make a state less attractive for potential immigrants, such as taxes or north-to-south transfer systems, would create negative externalities for third countries. In contrast, reforms in which wealthy states pay poor states to resettle refugees from other poor states would create positive externalities on third countries. Subsidizing such transfers would be more efficient than current policies used to reduce the social costs caused by concentrations of refugees in certain southern host states.