IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Free Migration between the EU and Switzerland: Impacts on the Swiss Economy and Implications for Monetary Policy

  • Peter Stalder
Registered author(s):

    The agreement with the European Union on liberalized migration had sizable effects on the Swiss economy. Simulations with a macroeconometric model show that the agreement mitigated the incidence of labor shortages and stimulated business investment, giving rise to an increased growth potential. The inflow of new immigrants also affected the demand-side of the economy by boosting consumption and housing investment. As the supply-side effects prevailed, inflation was dampened. Monetary policy reacted by pursuing a more expansionary course. Annual GDP growth was raised by half a percentage point in the upswing 2004–2008. However, as the employment effect was of similar size, the widely expected productivity gains did not materialize. Moreover, the unemployment rate was lifted by 0.5 to 0.7 percentage points and household suffered from lower real wage growth. The consequences of the migration agreement over a full economic cycle are more difficult to assess. If the increased flexibility of labor supply observed in the recent upturn carries symmetrically over to recessions, the migration agreement reinforces the swings in GDP and employment growth but dampens the swings in unemployment and inflation. In contrast, if the reaction of migration flows to rising and falling labor demand is asymmetric, unemployment might increase over the cycle because recovering labor demand attracts additional foreigners while the formerly dismissed workers remain in the unemployment pool. These different possibilities are illustrated in the paper by additional model simulations.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.sjes.ch/papers/2010-IV-9.pdf
    Download Restriction: no

    Article provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.

    Volume (Year): 146 (2010)
    Issue (Month): IV (December)
    Pages: 821-874

    as
    in new window

    Handle: RePEc:ses:arsjes:2010-iv-9
    Contact details of provider: Postal: c/o SNB/BNS, Börsenstrasse 15, PO Box 2800, CH-8022 Zürich
    Phone: +41 (0)44 631 32 34
    Fax: +41 (0)44 631 39 01
    Web page: http://www.sjes.ch
    Email:


    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. David Card, 2005. "Is the New Immigration Really So Bad?," NBER Working Papers 11547, National Bureau of Economic Research, Inc.
    2. Albert Ma, C.T. & Weiss, A.M., 1991. "A Signaling Theory of Unemployment," Papers 7, Boston University - Department of Economics.
    3. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
    4. David Card, 1989. "The Impact of the Mariel Boatlift on the Miami Labor Market," NBER Working Papers 3069, National Bureau of Economic Research, Inc.
    5. George J. Borjas, 2006. "Native Internal Migration and the Labor Market Impact of Immigration," Journal of Human Resources, University of Wisconsin Press, vol. 41(2).
    6. Rudolf Winter-Ebmer & Josef Zweimüller, 1999. "Do immigrants displace young native workers: The Austrian experience," Journal of Population Economics, Springer, vol. 12(2), pages 327-340.
    7. Peter STALDER, 1991. "A Macro Disequilibrium Model for Switzerland," Discussion Papers (REL - Recherches Economiques de Louvain) 1991022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    8. Gianmarco I P Ottaviano & Giovanni Peri, 2008. "Immigration and National Wages: Clarifying the Theory and the Empirics," Working Papers 2008.77, Fondazione Eni Enrico Mattei.
    9. Jörn-Steffen Pischke & Johannes Velling, 1997. "Employment Effects Of Immigration To Germany: An Analysis Based On Local Labor Markets," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 594-604, November.
    10. Richard Layard & Stephen Nickell, 1992. "Unemployment in the OECD Countries," CEP Discussion Papers dp0081, Centre for Economic Performance, LSE.
    11. Joshua D. Angrist & Adriana D. Kugler, 2001. "Protective or counter-productive? Labor market institutions and the effect of immigration on EU natives," Economics Working Papers 587, Department of Economics and Business, Universitat Pompeu Fabra.
    12. Abdurrahman Aydemir & George J. Borjas, 2007. "Cross-Country Variation in the Impact of International Migration: Canada, Mexico, and the United States," Journal of the European Economic Association, MIT Press, vol. 5(4), pages 663-708, 06.
    13. Rachel M. Friedberg, 2001. "The Impact Of Mass Migration On The Israeli Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1373-1408, November.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ses:arsjes:2010-iv-9. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Steiner)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.