Optimal assisted return policies are dynamically inconsistent

The number of individuals worldwide seeking asylum is steadily increasing. A significant share of asylum applications is rejected, resulting in millions of failed asylum seekers each year. Assisted return policies, a cost-effective alternative to forced repatriation, play a crucial role in addressing this issue. This paper presents a theoretical model analysing governments' optimal choice with respect to the generosity of these schemes. We show that ignoring the long-term effects of assistance on the attractiveness of the host country leads to support levels that are more generous than the dynamically consistent policy.