The Changing Structure of Immigration to the OECD: What Welfare Effects on Member Countries?

38 Pages Posted: 17 Sep 2018

See all articles by Michał Burzyński

Michał Burzyński

Luxembourg Institute of Socio-Economic Research (LISER)

Frédéric Docquier

Université catholique de Louvain; CREAM, Centre for Research on Environmental Appraisal & Management, UK; IZA Institute of Labor Economics

Hillel Rapoport

Paris School of Economics (PSE)

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Date Written: August 2018

Abstract

We investigate the welfare implications of two pre-crisis immigration waves (1991-2000 and 2001-2010) and of the post-crisis wave (2011-2015) for OECD native citizens. To do so, we develop a general equilibrium model that accounts for the main channels of transmission of immigration shocks – the employment and wage effects, the fiscal effect and the market size effect – and for the interactions between them. We parameterize our model for 20 selected OECD member states. We find that the three waves induce positive effects on the real income of natives; however, the size of these gains varies considerably across countries and across skill groups. In relative terms, the post-crisis wave induces smaller welfare gains compared to the previous ones. This is due to the changing origin mix of immigrants, which translates into lower levels of human capital and smaller fiscal gains. With a few exceptions, differences across cohorts explain a tiny fraction of the highly persistent, cross-country heterogeneity in the economic benefits from immigration.

Keywords: Immigration, Welfare, Crisis, Inequality, General equilibrium

Suggested Citation

Burzyński, Michał and Docquier, Frédéric and Rapoport, Hillel, The Changing Structure of Immigration to the OECD: What Welfare Effects on Member Countries? (August 2018). IMF Economic Review, Vol. 66, Issue 3, 2018. Available at SSRN: https://ssrn.com/abstract=3245765 or http://dx.doi.org/10.1057/s41308-018-0059-3

Michał Burzyński (Contact Author)

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

Maison des Sciences Humaines
11, Porte des Science
Esch-sur-Alzette/Belval, L-4366
Luxembourg

HOME PAGE: http://https://sites.google.com/site/mpburzynski/

Frédéric Docquier

Université catholique de Louvain ( email )

IRES
Place Montesquieu 3
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://https://perso.uclouvain.be/frederic.docquier/

CREAM, Centre for Research on Environmental Appraisal & Management, UK

University of Newcastle
NE1 7RU Newcastle Upon Tyne
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Hillel Rapoport

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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