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The macroeconomics of immigration

  • Kiguchi, Takehiro
  • Mountford, Andrew

Immigration has been a significant part of US population growth over recent decades, with the number of ``foreign born to non-US nationals" rising from approximately 10 million in 1970 to nearly 40 million or 12.9% of the US total population in 2010. In this paper, using a VAR with sign restriction identification, we find that unexpected increases in the working population lead to temporary reductions in GDP per capita and consumption per capita as would be predicted by the standard neoclassical growth model. However they do not lead to increases in non-residential investment or short run decreases in real wages as would also be predicted. The paper shows how a neoclassical growth model with a CES production function where migrant labor and capital are complements to skilled domestic labor and substitutes to each other can produce responses closer to those in the VAR. The paper thus provide support for the microeconometric studies on the impacts of immigration which found that immigrant labor is complementary to, rather than a substitute for, most native labor.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 45517.

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Date of creation: Mar 2013
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Handle: RePEc:pra:mprapa:45517
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  14. Jonathan Wadsworth, 2010. "The UK Labour Market and Immigration," National Institute Economic Review, National Institute of Economic and Social Research, vol. 213(1), pages R35-R42, July.
  15. Christian Dustmann & Tommaso Frattini & Ian Preston, 2008. "The Effect of Immigration along the Distribution of Wages," CReAM Discussion Paper Series 0803, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
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