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Immigration and Economic Growth: Further Evidence from US Data

  • Islam, Faridul
  • Khan, Saleheen
  • Rashid, Salim

This paper uses annual US data to examine the causal relationship between immigration and real GDP. Despite its implications for policy, a statistically robust relationship between these two series has been difficult to pin down. Our tests reveal that both the series are break-stationary. Therefore, we apply the Gregory-Hansen (1996) residual based cointegration approach to these series to establish a long run relation between them in the presence of regime shifts. Standard Granger causality test shows that the relation flows from economic growth to immigration in the short run, but not the reverse. However, the Error Correction Models within Vector Error Correction framework shows a bidirectional feedback relationship in the long run which is intuitively more appealing.

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File URL: http://purl.umn.edu/143464
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Article provided by Review of Applied Economics in its journal Review of Applied Economics.

Volume (Year): 08 (2012)
Issue (Month): 1 ()
Pages:

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Handle: RePEc:ags:reapec:143464
Contact details of provider: Web page: http://www.lincoln.ac.nz/story11874.html

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  1. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
  2. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
  3. Robertson, Peter E., 2002. "Demographic shocks and human capital accumulation in the Uzawa-Lucas model," Economics Letters, Elsevier, vol. 74(2), pages 151-156, January.
  4. Galor, Oded, 2004. "From Stagnation to Growth: Unified Growth Theory," CEPR Discussion Papers 4581, C.E.P.R. Discussion Papers.
  5. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
  6. Johansen, Søren & Juselius, Katarina, 1992. "Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for UK," Journal of Econometrics, Elsevier, vol. 53(1-3), pages 211-244.
  7. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
  8. Gregory, Allan W. & Hansen, Bruce E., 1996. "Residual-based tests for cointegration in models with regime shifts," Journal of Econometrics, Elsevier, vol. 70(1), pages 99-126, January.
  9. Asadul Islam, 2007. "Immigration Unemployment Relationship: The Evidence From Canada ," Australian Economic Papers, Wiley Blackwell, vol. 46(1), pages 52-66, 03.
  10. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
  11. Granger, C. W. J., 1988. "Causality, cointegration, and control," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 551-559.
  12. Kremer, Michael, 1993. "Population Growth and Technological Change: One Million B.C. to 1990," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 681-716, August.
  13. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  14. Morley, Bruce, 2006. "Causality between economic growth and immigration: An ARDL bounds testing approach," Economics Letters, Elsevier, vol. 90(1), pages 72-76, January.
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