A panel SVAR analysis of the long-run economic impact of migration

Piras, Romano

;Etzo, Ivan;Massidda, Carla;Mattana, Paolo

2021-01-01

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Abstract

This paper applies heterogeneous panel SVAR methodologies to investigate the long-run macroeconomic impacts of a migration shock. Data are from 19 OECD countries, observed for the 1985-2013 period. Sample median responses to common one-unit shocks in net migration comply with the traditional view of a nil long-run impact. Conversely, responses to idiosyncratic structural shocks show a clear role for immigration in up-lifting the steady-state level of total factor productivity and labor productivity and in decreasing the capital/labor ratio. Correlating individual country IRFs with a battery of country-specific macroeconomic indicators unveils that our findings are consistent with two distinct interaction models between receiving economies and immigrants. Specifically, there are countries for which selective immigration policies induce a joint jump in the steady-state values of tfp and labor productivity (leaving unaffected the capital/labor ratio) and others, relatively specialized in services and with tight labor markets, where capital/immigrants complementarities may also be achieved.