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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 increasing. To our knowledge, we are the first to document the dynamic implications of immigration in a search and matching framework. To quantify these effects in general equilibrium, 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, substantially larger than corresponding steady state effects, in line with the microdata. To alleviate the consequences of a refugee shock, policies affecting structural unemployment are important, e.g., benefit cuts and improved 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 May 2024.
  • Handle: RePEc:hhs:rbnkwp:0405
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    References listed on IDEAS

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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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