Scandinavian Working Papers in Economics

Working Paper Series,
Sveriges Riksbank (Central Bank of Sweden)

No 405: Dynamic Macroeconomic Implications of Immigration

Conny Olovsson (), Karl Walentin () and Andreas Westermark ()
Additional contact information
Conny Olovsson: Research Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden
Karl Walentin: Research Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden
Andreas Westermark: Research Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden

Abstract: International immigration flows are large, volatile and increasing. To our knowledge, we are the first to document the dynamic implications of immigration in a search and matching framework. To quantify these effects in general equilibrium, we use Swedish population registry data and productivity estimates from a matched employer-employee dataset. A refugee (economic) immigration shock yields large initial negative (positive) effects on GDP per capita and employment rates, substantially larger than corresponding steady state effects, in line with the microdata. To alleviate the consequences of a refugee shock, policies affecting structural unemployment are important, e.g., benefit cuts and improved integration.

Keywords: Immigration; refugees; dynamics; search and matching

JEL-codes: J21; J31; J61

Language: English

54 pages, First version: October 1, 2021. Revised: May 1, 2024. Earlier revisions: October 1, 2022, October 1, 2022, May 1, 2024.

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