Working Paper: NBER ID: w30879
Authors: Lorenzo Caliendo; Luca David Opromolla; Fernando Parro; Alessandro Sforza
Abstract: European countries experienced a large increase in labor supply due to the influx of Ukrainian refugees after the 2022 Russia invasion. We study its dynamic effects in a spatial model with forward-looking households of different skills, trade, and endogenous capital accumulation. We find that real GDP increases in Europe in the long term, with large distributional effects across countries and skill groups. In the short run, an increase in the supply of labor strains the use of capital structures that takes time to build. Over time, countries that build capital structures increase output, resulting in potential long run benefits.
Keywords: No keywords provided
JEL Codes: F1; F16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| labor supply shock from Ukrainian refugees (J69) | aggregate real GDP in Europe (O52) |
| labor supply shock from Ukrainian refugees (J69) | capital accumulation (E22) |
| capital accumulation (E22) | aggregate real GDP in Europe (O52) |
| labor supply shock from Ukrainian refugees (J69) | changes in output (E23) |