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Immigration, uncertainty and macroeconomic dynamics

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  • Michael Donadelli
  • Luca Gerotto
  • Marcella Lucchetta
  • Daniela Arzu

Abstract

This paper examines the macroeconomic effects of rising migration uncertainty in four advanced economies (i.e. US, UK, Germany and France). Migration uncertainty is first captured by the Migration Policy Uncertainty (MPUI) and the Migration Fear (MFI) news‐based indexes developed by Baker et al. (Immigration fears and policy uncertainty, 2015), and then by a novel Google Trend Migration Uncertainty Index (GTMU) based on the frequency of Internet searches for the term ‘immigration’. VAR investigations suggest that the macroeconomic implications of rising migration uncertainty differ across countries. Moreover, news‐based and Google search‐based migration fear shocks generate different macroeconomic effects. For instance, in the US (France), MPUI, MFI and GTMU shocks all improve (undermine) production and labour market conditions in the medium run. For Germany and the UK, mixed evidence is found, suggesting that increasing media attention on migration phenomena and rising population's interest in migration‐related issues influence people's mood differently. The observed heterogeneity in the macroeconomic effects of rising migration uncertainty can be explained by cross‐country gaps in (a) the level of labour market rigidity, (b) the degree of people's happiness and life satisfaction and (c) the percentage of graduates.

Suggested Citation

  • Michael Donadelli & Luca Gerotto & Marcella Lucchetta & Daniela Arzu, 2020. "Immigration, uncertainty and macroeconomic dynamics," The World Economy, Wiley Blackwell, vol. 43(2), pages 326-354, February.
    • Handle: RePEc:bla:worlde:v:43:y:2020:i:2:p:326-354
    DOI: 10.1111/twec.12865
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    Cited by:

    1. Michele Costola & Michael Donadelli & Luca Gerotto & Ivan Gufler, 2022. "Global risks, the macroeconomy, and asset prices," Empirical Economics, Springer, vol. 63(5), pages 2357-2388, November.
    2. Tripathi, Ishita, 2022. "Are terrorists responsible for anti-immigrant sentiments? Evidence from Europe," Economic Modelling, Elsevier, vol. 115(C).

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