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Social Science > Emigration and Immigration

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Cover Selected Issues Papers
Labor Market Integration and Migration: Republic of Kosovo
Stephen Ayerst
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.
Keywords:
Kosovo; Labor Markets; Population; Migration; EU integration; Policy simulation; labor market integration; Kosovo economy; labor market challenge; Unemployment; Labor shortages; Western Europe
Cover IMF Working Papers
Immigration and Local Inflation
Philip Barrett
and
Brandon Tan
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.
Keywords:
Immigration; inflation; utilities inflation; goods inflation; housing inflation; inflation in the United States; price level; Migration; Housing; Labor supply; Caribbean
Cover IMF Staff Country Reports
Republic of Kosovo: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues 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. A key result from the policy simulations is that, while the policies target various stages of the labor market, they have similar macroeconomic impacts. In this regard, it is important for policymakers to focus on policies with the largest potential impact relative to the cost of implementation. Additionally, policies should be combined with careful monitoring and updating to ensure that they remain effective and efficient.
Keywords:
gender wage gap; ECB monetary policy PASSTHROUGH; EU integration; women wage; ECB policy rate Passthrough; wage gender gap; Pensions; Pension spending; Labor markets; Digitalization; Public employment; Europe; Global; Western Europe
Cover IMF Working Papers
Shifting Perceptions: Unpacking Public Support for Immigrant Workers Integration in the Labor Market
Silvia Albrizio
,
Hippolyte W. Balima
,
Bertrand Gruss
,
Eric Huang
, and
Colombe Ladreit
This paper investigates public perceptions and support for policies aimed at integrating immigrant workers into domestic labor markets. Through large-scale surveys involving 6,300 respondents from Canada, Italy, and the United Kingdom, we provide new insights into attitudes toward migrant integration policies and the impact of different information provisions on belief updating. We identify three key factors that shape policy support: pre-existing stereotypes about immigrants, awareness of labor market integration policies for migrants, and, most critically, the perceived economic and social impact of these policies. Our findings reveal that providing information about the economic effects of integrating immigrants in the labor market significantly alters perceptions and increases support for these policies. Notably, explanations of the economic mechanisms underlying these policies are more effective than simply presenting policy effects or real-life stories of integration challenges. The survey also identifies the primary barriers to policy support, with fairness considerations toward unemployed native workers emerging as the top concern. It reveals that addressing individuals’ specific concerns through tailored mitigation measures can enhance support for policies aimed at better integration migrants. Nevertheless, a significant challenge remains in overcoming mistrust in the government’s commitment and ability to effectively implement these policies and accompanying measures.
Keywords:
Labor market integration policies; Survey; Perceptions; Immigration; Online experiment; Political Economy; integration policy; shape policy support; policy effect; mitigation policy; support variable; integration migrant; Migration; Labor markets; Labor market policy; Global
Cover IMF Working Papers
Migration into the EU: Stocktaking of Recent Developments and Macroeconomic Implications
Francesca Caselli
,
Huidan Huidan Lin
,
Frederik G Toscani
, and
Jiaxiong Yao
Against the backdrop of the war in Ukraine, immigration into the European Union (EU) reached a historical high in 2022 and stayed significantly above pre-pandemic levels in 2023. The recent migration has helped accommodate strong labor demand, with around two-thirds of jobs created between 2019 and 2023 filled by non-EU citizens, while unemployment of EU citizens remained at historical lows. Ukrainian refugees also appear to have been absorbed into the labor market faster than previous waves of refugees in many countries. The stronger-than-expected net migration over 2020-23 into the euro area (of around 2 million workers) is estimated to push up potential output by around 0.5 percent by 2030—slightly less than half the euro area’s annual potential GDP growth at that time—even if immigrants are assumed to be 20 percent less productive than natives. This highlights the important role immigration can play in attenuating the effects of the Europe’s challenging demographic outlook. On the flipside, the large inflow had initial fiscal costs and likely led to some congestion of local public services such as schooling. Policy efforts should thus seek to continue to integrate migrants into the labor force while making sure that the supply of public services and amenities (including at the local level) keeps up with the population increase.
Keywords:
Migration; Labor Markets; European Union; migration perception; net migration; integration policy; EU citizen; migration development; Labor shortages; Aging; Europe
Cover IMF Working Papers
The Joint Effect of Emigration and Remittances on Economic Growth and Labor Force Participation in Latin America and the Caribbean
Alina Carare
,
Alejandro Fiorito Baratas
,
Jessie Kilembe
,
Metodij Hadzi-Vaskov
, and
Wenzhang Zhang
We provide a consistent empirical framework to estimate the net joint effect of emigration and remittances on the migrants’ countries of origin key economic variables (GDP growth and labor force participation), while addressing the endogeneity concerns using novel “shift-share” instrumental variables in the spirit of Anelli and others (2023). Understanding this joint impact is crucial for the Latin America and the Caribbean region that has seen a continuous growth in remittances over the past decades, due to steady emigration, and where remittances represent the largest capital inflows for many countries now. Focusing on the past two decades (1999-2019), this study finds that on average emigration has a negative and statistically significant impact on contemporaneous economic growth and change in labor force participation in the countries of origin across LAC, while remittances partially mitigate this adverse impact—especially on economic growth—resulting in a small negative net joint effect. There are significant differences across subregions for all estimates, with the largest negative effects observed in the Caribbean. In addition, the negative impact of emigration and remittances on the change in labor participation is small, but for the youngest cohort (15-24) is twice as large as for the overall labor force participation. The results are robust to various specifications, variables, and measurements of emigration and remittances.
Keywords:
Emigration; Remittances; Labor Force Participation; Economic Growth; Latin America; emigration flow; emigration rate; remittances in Lac; estimates of emigration; remittances on the migrants' countries of origin; Migration; Income; Caribbean; Central America; South America
Cover IMF Staff Country Reports
Canada: 2024 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. Western Hemisphere Dept.
The 2024 Article IV Consultation discusses that the Canadian economy appears to have achieved a soft landing: inflation has come down almost to target, while a recession has been avoided, with gross domestic product growth cushioned by surging immigration even as per capita income has shrunk. Housing unaffordability has risen to levels not seen in a generation, with demand boosted by immigration and supply facing continued challenges to expansion. Canada’s recent introduction of quantitative fiscal objectives is welcome and could be followed by adoption of a formal fiscal framework to anchor fiscal policy even more effectively. The authorities’ multipronged approach to address housing affordability is expected to yield results over time, but further efforts will likely be needed at all levels of government to address the large housing supply gap. Boosting Canada’s lagging productivity growth—including by taking steps to promote investment and R&D, harness artificial intelligence and other advanced technologies (within appropriate guardrails), and capitalize on the green transition—is a key priority for the country’s long-term prospects. Given skills gaps and demographic pressures, immigration remains a critical ingredient.
Keywords:
investment Canada Act; emissions-reduction goal; further policy guidance; consultation cycle; consultation notice; Housing; Inflation; Migration; Labor markets; Financial sector stability; Global
Cover IMF Staff Country Reports
Georgia: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper explores drivers of inflation and monetary policy in Georgia. Inflation spiked in Georgia following the pandemic and Russia’s war in Ukraine. A positive output gap indicates that high demand is generating inflationary pressure in the economy. Estimates suggest tighter monetary policy in 2021 helped significantly lower peak inflation in 2022. One response to uncertainty is for monetary policy makers to act more cautiously – responding less vigorously with monetary policy to shocks. Given the challenges in managing inflation in a highly dollarized, small open-economy prone to large external shocks, it is important to look at the drivers of inflation in Georgia, the monetary policy stance including the natural rate, the transmission mechanism including the impact of dollarization, and the appropriate monetary policy path going forward. Using a range of approaches, IMF establish that monetary policy in Georgia is effective, that it is close to neutral, and that heightened uncertainty supports a gradual policy normalization.
Keywords:
commodity import price index; Georgia population projection; trend inflation; IMF staff calculation; inflation projection; Inflation; Labor markets; Unemployment; Employment; Central Asia; Middle East
Cover IMF Staff Country Reports
New Zealand: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper investigates why New Zealand’s inflation is higher and further from target than comparator economies considering two main hypotheses: (1) the persistence of pandemic era shocks, and (2) strong migration inflows fuelling demand. The paper finds that, like in many advanced economies, expansionary fiscal and monetary policy, high global commodity prices, exchange rates, and high maritime transport costs all fed into higher inflation. However, unique for New Zealand, the delayed reopening of the economy likely caused a postponed demand shock relative to similar economies. Results show that the impact of these shocks decay rapidly over time, suggesting positive short-term inflation dynamics. With an eye for what lies ahead, the paper finds that large migration waves are associated with short-run increases in inflation, but that these effects are relatively modest and no longer significant after four years. Instead, the long-run dynamics show evidence that migration can lead to significant long-term gains to productivity, output, and capital growth. Countries with tight labor markets exhibit similar patterns to those without, except the inflationary effects of migration dissipate faster.
Keywords:
supply and demand demand shock; PPI inflation; net migration trend; climate goal; impulse response; Migration; Inflation; Greenhouse gas emissions; Climate policy; Labor markets; Global
Cover IMF Staff Country Reports
Australia: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper examines macroeconomic impact of migration in Australia. Migration in Australia has historically been a significant source of population growth, with a third of the population born overseas. Migration is set to become even more important as the population natural growth rate declines. Australia attracts some of the best-educated migrants to Organization for Economic Cooperation and Development countries who are mostly skilled workers and students, with high labor force participation rates and low unemployment. Disentangling macroeconomic effects of migration from drivers of migration is challenging, but within Australia, migration surges have historically been associated with higher growth and favorable labor market outcomes, with negligible price pressures except in the housing market. Cross-country analysis using instrumental variables confirms a positive impact of migration on macroeconomic outcomes—output, employment, and productivity—without significant inflationary impact. While housing affordability is impacted at the margin, this could represent structural supply shortages and would be best addressed by boosting supply.
Keywords:
inflow shock; labor market outcome; I. Effects of Migration shock; macroeconomic outcome; labour outcome; Migration; Labor force participation; Population growth; Housing prices; Global