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Does Immigration Grow the Pie? Asymmetric Evidence from Germany

Author

Listed:
  • Nicolo Maffei-Faccioli
  • Eugenia Vella

Abstract

We provide empirical evidence suggesting that net migration shocks can have substantial demand effects, potentially acting like positive Keynesian supply shocks. Using monthly administrative data (2006-2019) for Germany in a structural VAR, we show that the shocks stimulate vacancies, wages, house prices, consumption, investment, net exports, and output. Unemployment falls for natives (dominant jobcreation effect), driving a decline in total unemployment, while rising for foreigners (dominant job-competition effect). The geographic origin of migrants and the education level of residents matter crucially for the transmission. Overall, the evidence implies that the policy debate should focus on redistributive strategies between natives and foreigners.

Suggested Citation

  • Nicolo Maffei-Faccioli & Eugenia Vella, 2021. "Does Immigration Grow the Pie? Asymmetric Evidence from Germany," DEOS Working Papers 2105, Athens University of Economics and Business.
    • Handle: RePEc:aue:wpaper:2105
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    References listed on IDEAS

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    Cited by:

    1. Bandeira, Guilherme & Caballé, Jordi & Vella, Eugenia, 2022. "Emigration and fiscal austerity in a depression," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).

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    More about this item

    Keywords

    Migration; job creation; job competition; Keynesian supply shocks;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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