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Should Germany Have Built a New Wall? Macroeconomic Lessons from the 2015-18 Refugee Wave

NBER Working Paper No. w26973

81 Pages Posted: 13 Apr 2020 Last revised: 15 Mar 2026

See all articles by Christopher Busch

Christopher Busch

Autonomous University of Barcelona - MOVE (Markets, Organizations and Votes in Economics); Barcelona Graduate School of Economics (Barcelona GSE)

Dirk Krueger

University of Pennsylvania; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Goethe University Frankfurt; Netspar

Alexander Ludwig

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA); Goethe University Frankfurt

Irina Popova

Goethe University Frankfurt

Zainab Iftikhar

Goethe University Frankfurt

Multiple version iconThere are 3 versions of this paper

Date Written: April 2020

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.

Suggested Citation

Busch, Christopher and Krueger, Dirk and Ludwig, Alexander and Popova, Irina and Iftikhar, Zainab, Should Germany Have Built a New Wall? Macroeconomic Lessons from the 2015-18 Refugee Wave (April 2020). NBER Working Paper No. w26973, Available at SSRN: https://ssrn.com/abstract=3574437

Christopher Busch (Contact Author)

Autonomous University of Barcelona - MOVE (Markets, Organizations and Votes in Economics) ( email )

Campus de Bellaterra-UAB Edifici B (s/n)
EDIFICI B
Cerdanyola del Vallès
, Barcelona 08193
Spain

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Dirk Krueger

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Goethe University Frankfurt

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Netspar

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Alexander Ludwig

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Irina Popova

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Zainab Iftikhar

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

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