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The macroeconomics of immigration

Takehiro Kiguchi and Andrew Mountford ()

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: Macroeconomics; Immigration (search for similar items in EconPapers)
JEL-codes: E0 E2 E26 F2 (search for similar items in EconPapers)
Date: 2013-03
New Economics Papers: this item is included in nep-mac and nep-mig
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Citations: View citations in EconPapers (21) Track citations by RSS feed

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