Abstract
The paper aims to examine the new trends of immigration and their implications on the economy of the host country, particularly on economic growth and unemployment. As the effects of aging population can be felt in many countries, especially in developed ones, migration will continue to play an increasing role in the economic growth of all countries, either sending or receiving. Given the changes in migration trends and migration policies, the impact of the process should be revised. One of the main characteristics that significantly impacts economic growth is the education and skill level of immigrants. In the light of this fact, the research aims to identify the impact of immigration on growth through the skill composition channel. We analyzed the impact of skilled and unskilled immigration on growth, also including the unemployment rate as a relevant factor for the labour market. We estimated six dynamic panel models using the system of generalised method of moments (GMM) to take into account the risk of an endogeneity bias of the migration variables. The results indicate a positive and significant effect of skilled immigration on the economic growth of the receiving country. The results also point to a 1.3 percent β-convergence rate consistent with the values found in the convergence literature which are around 2 percent.
Highlights
The attitude towards immigration has changed over time in Europe
The free movement of goods and services is recognised in the European Union, in the present societies the migration cannot be seen as an alternative to the rising of protectionism, or vice versa, as it was happening after the Second World War (Bhagwati, 1982)
We have estimated six dynamic panel models using the system of generalised method of moments (GMM) to investigate the impact of immigration variables on growth and unemployment1
Summary
The attitude towards immigration has changed over time in Europe. Europe has a long history of internal migration flows that varied in response to the shifts of economical and political power in Europe. The free movement of goods and services is recognised in the European Union, in the present societies the migration cannot be seen as an alternative to the rising of protectionism, or vice versa, as it was happening after the Second World War (Bhagwati, 1982). This was due to the fact that immigration acts like trade, because the immigrants move from the countries with low income and productivity to countries with higher productivity and, as a result, with higher income, causing the increased allocative efficiency of labour in a specific geographical space (Centre for Economic Performance London School of Economics, 2016)
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