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Discussion Paper Details

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Title: Should Germany Have Built a New Wall? Macroeconomic Lessons from the 2015-18 Refugee Wave

Author(s): Christopher Busch, Zainab Iftikhar, Dirk Krueger, Alexander Ludwig and Irina Popova

Publication Date: April 2020

Keyword(s): Demographic Change, Immigration, Overlapping Generations and Refugees

Programme Area(s): Labour Economics, Macroeconomics and Growth, Monetary Economics and Fluctuations and Public Economics

Abstract: In 2015-2016 Germany experienced a wave of predominantly low-skilled refugee immigration. We evaluate its macroeconomic and distributional effects using a quantitative overlapping generations model calibrated using German micro data to replicate education and productivity differentials between foreign born and native workers. Workers are modelled as imperfect substitutes in aggregate production leading to endogenous wage differentials. We simulate the dynamic effects of this refugee wave, with specific focus on the welfare impact on low skilled natives. Our results indicate that the small losses this group suffers can be compensated by welfare gains of other parts of the native population.

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Bibliographic Reference

Busch, C, Iftikhar, Z, Krueger, D, Ludwig, A and Popova, I. 2020. 'Should Germany Have Built a New Wall? Macroeconomic Lessons from the 2015-18 Refugee Wave'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14562