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Social Science > Emigration and Immigration

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Cover Finance & Development
Finance & Development, March 2025
International Monetary Fund. Communications Department
Talent is one of the world’s most valuable resources. Countries that identify and nurture the best minds gain a competitive edge. Those that fail to do so don’t just slow their own progress—the world loses out, too. F&D magazine’s March issue examines the role of global talent and human capital through a macroeconomic lens.
Keywords:
historian PAULINA Bren; IMF photo; AI tool; WTO accession; slowing productivity growth; Migration; Job training; Women; Global; Caribbean; Africa; Southern Europe; Sub-Saharan Africa
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
Remittances in Times of Uncertainty: Understanding the Dynamics and Implications
Patrick A. Imam
,
Kangni R Kpodar
,
Djoulassi K. Oloufade
, and
Vigninou Gammadigbe
This paper delves into the intricate relationship between uncertainty and remittance flows. The prevailing focus has been on tangible risk factors like exchange rate volatility and economic downturn, overshadowing the potential impact of uncertainty on remittance dynamics. Leveraging a new dataset of quarterly remittances combined with uncertainty indicators across 77 developing countries from 1999Q1 to 2019Q4, the analysis highlights that uncertainty in remittance-sending countries negatively affects remittance flows. In contrast, uncertainty in remittance receiving-countries has a more complex, dual effect. In countries with high private investment ratios, rising domestic uncertainty leads to a decline in remittances. Conversely, in countries with low public spending on education and health, remittances increase in response to uncertainy, serving as a social safety net. The paper underscores the heterogeneous and non-linear effects of domestic uncertainty on remittance flows.
Keywords:
Remittances; Uncertainty; Shocks; remittance flow; remittance dynamics; IRF of remittance; remittances in times; uncertainty indicator; Migration; Private investment; Health care spending; Global
Cover IMF Working Papers
Aggregate Shocks and the Formation of Preferences and Beliefs
Paola Giuliano
and
Antonio Spilimbergo
A growing body of work has shown that aggregate shocks affect the formation of preferences and beliefs. This article reviews evidence from sociology, social psychology, and economics to assess the relevance of aggregate shocks, whether the period in which they are experienced matters, and whether they alter preferences and beliefs permanently. We review the literature on recessions, inflation experiences, trade shocks, and aggregate non-economic shocks including migrations, wars, terrorist attacks, pandemics, and natural disasters. For each aggregate shock, we discuss the main empirical methodologies, their limitations, and their comparability across studies, outlining possible mechanisms whenever available. A few conclusions emerge consistently across the reviewed papers. First, aggregate shocks impact many preferences and beliefs, including political preferences, risk attitudes, and trust in institutions. Second, the effect of shocks experienced during young adulthood is stronger and longer lasting. Third, negative aggregate economic shocks generally move preferences and beliefs to the right of the political spectrum, while the effects of non-economic adverse shocks are more heterogeneous and depend on the context.
Keywords:
trade shock; inflation experience; effect of shock; economic shock; beliefs to the right; Economic recession; Natural disasters; Migration; Inflation; Global; 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 Working Papers
Climate Variability and Worldwide Migration: Empirical Evidence and Projections
Cristina Cattaneo
,
Emanuele Massetti
,
Shouro Dasgupta
, and
Fabio Farinosi
We estimate a bilateral gravity equation for emigration rates controlling for decadal weather averages of temperature, precipitation, droughts, and extreme precipitation in origin countries. Using the parameter estimates of the gravity equation, we estimate global, regional, and country-by-country emigration flows using different population and climate scenarios. Global emigration flows are projected to increase between 73 and 91 million in 2030-2039; between 83 and 102 million in 2040-2049; between 88 and 121 in 2050-59, and between 87 and 133 million in 2060-2069. Changes in emigration flows are mainly due to population growth in the origin countries.
Keywords:
Climate change; International Migration.; A. migration data; country-by-country emigration flow; climate scenario; climate variability; gravity equation; Migration; Natural disasters; Population growth; Global