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Dynamic macroeconomic implications of immigration

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  • Olovsson, Conny
  • Walentin, Karl
  • Westermark, Andreas

Abstract

International immigration flows are large, volatile, and increasing. We document the dynamic implications of immigration, and account for the differential unemployment and labor force participation rates between immigrants and natives. To quantify the effects of immigration, we use Swedish population registry data and productivity estimates from a matched employer–employee dataset. A refugee (economic) immigration shock yields large initial negative (positive but delayed) effects on GDP per capita and employment rates, substantially larger than, but with the same sign as the corresponding steady state effects. This reflects the empirical fact that labor market integration is a gradual process over many years.

Suggested Citation

  • Olovsson, Conny & Walentin, Karl & Westermark, Andreas, 2025. "Dynamic macroeconomic implications of immigration," Journal of Monetary Economics, Elsevier, vol. 151(C).
    • Handle: RePEc:eee:moneco:v:151:y:2025:i:c:s0304393225000182
    DOI: 10.1016/j.jmoneco.2025.103747
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    More about this item

    Keywords

    Immigration; Refugees; Dynamics; Search and matching;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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