Spillovers and strategic interaction in immigration policies

Abstract

Asylum policies are interdependent across countries: policy choices in one country can affect refugee flows into neighbouring countries and may provoke policy changes there, in an a priori unknown direction. We formulate a dynamic model of refugees’ location choices and of the strategic interaction among destinations that we fit to Syrian refugee migration to Europe. We find that south and southeastern European countries view recognition rates as strategic substitutes, whereas the same policies can be strategic complements in northern Europe. Our findings imply that regression frameworks which use cross-country variation to estimate the effects of recognition rates on immigration underestimate (overestimate) the effect if this policy is a strategic substitute (complement).