DP14562 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, Irina Popova|
|Publication Date:||April 2020|
|Keyword(s):||Demographic Change, Immigration, Overlapping Generations, Refugees|
|JEL(s):||E20, F22, H55|
|Programme Areas:||Labour Economics, Public Economics, Monetary Economics and Fluctuations, Macroeconomics and Growth|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=14562|
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.