Immigration and economic growth: do origin and destination matter?

Abstract

This paper assesses the heterogeneous effects of immigration on economic growth depending on both the origin and the destination countries. Following the development of a simple growth model augmented by the embodied human capital of immigrants, we estimate the growth equation using both a gravity-style instrument variable approach and the dynamic system-GMM estimator. We find that immigration from developed economies positively affects the economic growth of the host countries. Furthermore, the growth-enhancing effect of immigration is significantly larger when immigration flows from developed to developing economies than when it does to those that include both developed and developing economies. We interpret these results as evidence of immigrants from developed countries bringing with them -upon entry -their advanced knowledge on technology and institutions into the developing countries that host them. JEL classification codes: F22, O15, O41, O43

Does a change in immigration affect the unemployment rate in host countries? Evidence from Australia

“…Australia has been recognized as one of the countries that receives a significant number of immigrants each year. According to Bove and Elia (2017) and Kang and Kim (2018), the country receives almost as many immigrants as Canada. Australia's annual permanent migration intake is slightly less than 200,000 people.…”

The influence of migration on the labour market status in Western European countries

“…On the other hand, any remaining disparity in earnings may be due to unobserved variables or due to discrimination (Lang 2000&Lemmermann andRiphahn 2018). It is already a well-known fact that migrants experience descending occupational flexibility upon arrival in the destination country, relative to the position they had in their country of origin (Kang & Kim, 2018). For instance, Bernard and Bell (2018)mentioned in their research that migrants experience a U-shaped pattern during their change from the labour market in the country of origin to the labour market in the country of destination (Ruhs et al,., 2017).…”

The economic effects of labour immigration in developing countries

“…For example, Hornung (2014) demonstrates that the Huguenot immigration to Prussia in the late 17 th century led to long-term productivity improvements in textile enterprises, and argues that this occurred through a transfer of technology. In addition to new production technologies, immigrants may also introduce knowledge of "market-supporting institutions" (Kang and Kim, 2012) that increase productivity. This knowledge transfer may be especially strong if specific experts are hired by firms to impart knowledge (Markusen and Trofimenko, 2009).…”

“…For example, Orefice (2010) concludes that immigration has a negative effect on per capita GDP, but that high skilled immigration had a positive effect. Another example is that Kang and Kim (2012) find that immigration has no effect on growth, but that migrants from developed countries increase growth, particularly if they were migrating to less developed countries.…”