Working Paper: CEPR ID: DP14562
Authors: Christopher Busch; Dirk Krueger; Alexander Ludwig; Irina Popova; Zainab Iftikhar
Abstract: In 2015-2016 Germany experienced a wave of predominantly low-skilled refugeeimmigration. We evaluate its macroeconomic and distributional effects using a quantitativeoverlapping generations model calibrated using German micro data to replicateeducation and productivity differentials between foreign born and native workers.Workers are modelled as imperfect substitutes in aggregate production leading to endogenouswage differentials. We simulate the dynamic effects of this refugee wave, withspecific focus on the welfare impact on low skilled natives. Our results indicate thatthe small losses this group suffers can be compensated by welfare gains of other partsof the native population.
Keywords: immigration; refugees; overlapping generations; demographic change
JEL Codes: F22; E20; H55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| refugee inflow in 2015-2016 (F22) | overall labor supply (J20) |
| overall labor supply (J20) | lower capital-labor ratio (D29) |
| overall labor supply (J20) | lower wages (J31) |
| overall labor supply (J20) | increased rates of return (G11) |
| inflow of low-skilled foreign workers (F66) | wages of native workers (J38) |
| inflow of low-skilled foreign workers (F66) | wages of skilled native workers (J31) |
| inflow of low-skilled foreign workers (F66) | wages of unskilled native workers (F66) |
| influx of young migrants (J11) | old-age dependency ratio (J14) |
| influx of young migrants (J11) | returns on pay-as-you-go social security system (H55) |
| administrative costs associated with integrating migrants (J68) | native welfare (I39) |
| low-skilled natives experiencing net wage losses (F66) | welfare gains from broader native population (D69) |