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Immigration and the macroeconomy: some new empirical evidence

Author

Listed:
  • Francesco Furlanetto

    (Norges Bank)

  • Orjan Robstad

    (Norges Bank)

Abstract
We propose a new SVAR identification scheme that enables us to disentangle immigration shocks from other macroeconomic shocks in a sign-restricted model estimated on Norwegian data over the period 1990Q1 - 2014Q2. Notably, immigration is an endogenous variable in the model and can respond to the state of the economy. We find that domestic labor supply shocks and immigration shocks are well identified and are the dominant drivers of immigration dynamics. An exogenous immigration shock lowers unemployment (even among native workers), has a small positive effect on prices and on public finances, no impact on house prices and household credit, and a negative effect on productivity driven by a large decline in capital intensity. (Copyright: Elsevier)

Suggested Citation

  • Francesco Furlanetto & Orjan Robstad, 2019. "Immigration and the macroeconomy: some new empirical evidence," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 34, pages 1-19, October.
    • Handle: RePEc:red:issued:18-245
    DOI: 10.1016/j.red.2019.02.006
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    More about this item

    Keywords

    Labor supply shocks; Immigration shaocks; Job-related immigration; Identification; SVAR;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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