The Asymmetric Unemployment Response of Natives and Foreigners to Migration Shocks

Nicolò Maffei-Faccioli () and Eugenia Vella

No 2020008, Working Papers from The University of Sheffield, Department of Economics

Abstract: This paper provides new evidence on the macroeconomic effects of net migration shocks in Germany. Using monthly data from 2006 to 2019 and a variety of identification strategies in a structural vector autoregressive model, we show that migration shocks are expansionary. Net migration increases persistently industrial production, per capita net exports and tax revenue. In the labor market, migra- tion boosts persistently job openings and, after a year and a half, hourly wages in manufacturing. Total unemployment declines but the response is asymmetric be- tween natives and foreigners. Unemployment falls persistently for natives while it rises a year after the shock for foreigners as the newly settled migrants enter the labor market gradually. Using also quarterly data in a mixed-frequency SVAR, we shed light on the employment and participation responses for natives and foreign- ers. We also show that migration shocks increase per capita GDP, investment, and hourly wages of the aggregate economy. Taken together, our results highlight a job-creation effect for natives and a job-competition effect for foreigners.

Keywords: Migration; unemployment; job creation; job competition; mixed-frequency SVAR. (search for similar items in EconPapers)
JEL-codes: C11 C32 E32 F22 F41 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2020-08
New Economics Papers: this item is included in nep-eec, nep-mac, nep-mig and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:shf:wpaper:2020008

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