Immigration, human capital and growth in the host country

Abstract

Immigration, as a source of population growth, is traditionally associated, by neoclassical economics, with negative output and growth effects for the host economy in per capita terms. This paper explores how different these effects can be when the human capital brought in by immigrants upon arrival is explicitly considered in a Solow growth model augmented by human capital and migration. The main finding is that the negative output and growth effects of immigration tend to become less important the higher the imported immigrants' human capital relative to natives. In order to evaluate the order of magnitude of these effects, descriptive evidence, based on education data, and econometric evidence, based upon the estimation of the transition equation in the augmented Solow model, is provided for a set of OECD economies during the period 1960-1985. Because of their human capital content, migration inflows are shown to have less than half the negative impact of comparable natural population increases.