Working Paper: NBER ID: w26973
Authors: Christopher Busch; Dirk Krueger; Alexander Ludwig; Irina Popova; Zainab Iftikhar
Abstract: In 2015-2016 Germany experienced a wave of predominantly low-skilled refugee immigration. We evaluate its macroeconomic and distributional effects using a quantitative overlapping generations model calibrated using German micro data to replicate education and productivity differentials between foreign born and native workers. Workers are modelled as imperfect substitutes in aggregate production leading to endogenous wage differentials. We simulate the dynamic effects of this refugee wave, with specific focus on the welfare impact on low skilled natives. Our results indicate that the small losses this group suffers can be compensated by welfare gains of other parts of the native population.
Keywords: refugee wave; Germany; macroeconomic effects; welfare impact; low-skilled migrants
JEL Codes: E20; F22; H55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| influx of low-skilled refugees (F22) | overall labor supply (J20) |
| overall labor supply (J20) | capital-labor ratio (J24) |
| capital-labor ratio (J24) | wages (J31) |
| wages (J31) | net wages for low-skilled natives (J31) |
| relative scarcity of skilled native workers (F66) | wages for skilled natives (J31) |
| influx of young migrants (J11) | old-age dependency ratio (J14) |
| old-age dependency ratio (J14) | sustainability of pay-as-you-go pension system (H55) |
| increase in tax-financed government expenditures (H59) | welfare of natives (I39) |
| low-skilled migrants (J61) | welfare of low-skilled natives (J68) |