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Immigration into the EU: Possible macroeconomic implications

Julia Kielyte ()

Journal of Economics and Econometrics, 2016, vol. 59, issue 1, 79-102

Abstract: EU is facing an unprecedented influx of migrants, with around 1.2 million asylum applications expected in 2015, compared to the 550,000 applications received in 2014. This influx mirrors global development. According to UNHCR, displacement from wars, conflict, and persecution worldwide is at the highest levels ever recorded, and it is accelerating fast, reaching 60 million people in 2014. This paper estimates the possible macroeconomic impact of the larger-than-usual migration flows to the EU in the short- to medium term. Our estimates suggest that likely the impact is set to differ across EU countries that are not all directly affected. For the time being the economic impact of the immigration wave will be limited. Except for the frontline countries as well as Austria, Germany and Sweden, most EU countries face negligible macroeconomic impacts. Following upfront costs, likely the impact of migration will be positive, although likely will be modest in size, for growth and public finances. For example, in Germany an increase in public spending means a slight stimulus of about 0.2% to GDP in 2015. The medium-term impact could be more pronounced, especially given rapidly ageing workforce in many EU countries. However, noteworthy supply-side effects will only emerge to the extent that countries are able to integrate the newcomers into the labour market and will also crucially depend on the characteristics of the migrants.

Keywords: International migration; labour supply; labour demand; budgetary effects; economic growth. (search for similar items in EconPapers)
JEL-codes: F02 F22 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:eei:journl:v:59:y:2016:i:1:p:79-102