Immigration and Secular Stagnation
ISER DP No. 1054, May 2019
34 Pages Posted: 3 Jun 2019 Last revised: 16 Jul 2019
Date Written: June 4, 2019
We examine the effect of immigration on the host country in the dynamic model that can deal with secular unemployment. Immigration has contrasting effects, depending on the economic state of the host country. If there is unemployment, immigration worsens unemployment and decreases consumption by native residents whereas if full employment prevails, immigration has the effect of boosting consumption while keeping full employment. However, an influx of too many immigrants can turn the host country into stagnation. We also find that immigrants’ remittances are harmful to the host country under full employment but beneficial under secular stagnation.
Keywords: Immigration, unemployment, secular stagnation, aggregate demand deficiency, remittances
JEL Classification: F16, F22, F41
Suggested Citation: Suggested Citation