Social Science > Emigration and Immigration
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Abstract
The latest World Economic Outlook reports a slowdown in global growth as downside risks intensify. While policy shifts unfold and uncertainties reach new highs, policies need to be calibrated to rebalance growth-inflation trade-offs, rebuild buffers, and reinvigorate medium-term growth, thereby reducing both internal and external imbalances. Policies that promote healthy aging, bridge gender disparities, and enhance the alignment of migrants’ skills with local labor market demands can play a crucial role in countering slow economic growth and fiscal pressures, especially when coupled with infrastructure investment.The movement of migrants and refugees has become a fixture of public debate. Chapter 3 examines how changes in the stringency of migrant and refugee policies can alter the journeys and legal pathways people choose to take within and between economies. For example, stricter policies can deflect flows of people to new destinations. Those economies can experience short-term challenges from strains on local services but ultimately benefit in the longer term. Costs are likely to be more severe where challenges to integrate newcomers are larger—notably in emerging market and developing economies—and their skills are not well matched with local labor market needs. Benefits can materialize sooner by boosting infrastructure investment and promoting private sector development. International cooperation can also help by more evenly distributing short-term costs across economies.
Access to top performers sets an upper bound on a country’s aspirations
This paper highlights recent trends in the Kosovo labor market and emigration. Like other Western Balkan countries, Kosovo experienced a sharp decline in population over the previous decade, as emigration increased. Using a structural model of the labor market and migration, the paper examines the potential impact of further EU integration. While lower migration costs hurt the economy, productivity convergence brought on by EU integration has an offsetting impact by increasing wages, lowering unemployment, and increase immigration. Policy simulations show that policymakers have a diverse set of tools—including structural reforms, active labor market policies, business support, and labor participation support—to boost potential and support the labor market.
We use a shift-share approach to estimate the impact of inward immigration on local inflation in the United States. We find that a higher rate of immigration reduces inflation, lowering it by about 0.1 to 0.2 percentage points following a doubling of immigration. Higher immigration flows also lower local goods inflation, increase local housing and utilities inflation, and have no statistically significant impact on inflation in other services. Effects are approximately two and three time larger for working age and low-education immigrants. We do not detect a statistically significant impact of more educated immigrants on overall inflation, but they do increase local housing inflation. Our results can be jointly rationalized by a simple general equilibrium model where the substitutability of capital and labor varies across industries but capital is fixed in the short run.