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Dynamic Macroeconomic Implications of Immigration

Author

Listed:
  • Olovsson, Conny

    (Research Department, Central Bank of Sweden)

  • Walentin, Karl

    (Research Department, Central Bank of Sweden)

  • Westermark, Andreas

    (Research Department, Central Bank of Sweden)

Abstract

International immigration flows are large, volatile and have recently increased. This paper is the first to study dynamic effects of immigration in a search and matching framework. To quantify general equilibrium effects, 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) effects on GDP per capita and employment rates, several times larger than corresponding steady state effects, in line with the microdata. To alleviate the effects of a refugee shock, policies affecting structural unemployment are important, e.g., benefit cuts and increasing the speed of integration.

Suggested Citation

  • Olovsson, Conny & Walentin, Karl & Westermark, Andreas, 2021. "Dynamic Macroeconomic Implications of Immigration," Working Paper Series 405, Sveriges Riksbank (Central Bank of Sweden), revised 01 Oct 2022.
    • Handle: RePEc:hhs:rbnkwp:0405
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    References listed on IDEAS

    as
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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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