Macroeconomic Impacts of Canadian Immigration: Results from a Macro Model

Abstract

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New Directions in Immigration Policy: Canada's Evolving Approach to the Selection of Economic Immigrants

“…The increased focus on the economic aspects of immigration presents a dilemma for policy development in that there is little clear and definitive evidence on the economic implications of immigration. On balance, the existing research suggests that the effect of immigration on GDP per capita, the wages of domestic workers, and a country's fiscal balance is small; either small positive or negative, or zero ( see Lee and Miller, ; Kerr and Kerr, ; Dungan, ; Journal of the European Economic Association special issue, 2012) This research faces serious methodological challenges and is anything but definitive. There are factors that are often excluded, such as the likely positive role of the second generation in economic growth, or immigrants' contribution to innovation.…”

Skilled Immigration, Innovation, and the Wages of Native‐Born Americans

“…That paper used an IV approach to exploit data on skilled immigrants in the religious flight of French Protestants to Prussia in 1685 and Prussian firm‐level data from 1802. At a macroeconomic level, Dungan, Fang, and Gunderson () also reported a positive effect of immigration on a number of economic indicators in the host country, including investment and productivity.…”

Do immigrants’ funds affect the exchange rate?

“…While their simulations suggest a positive impact of immigration on a number of macroeconomic variables including gross domestic product (GDP), aggregate demand, investment, productivity, government expenditures, taxes and net government balances, the result with regard to the exchange rate is mixed. Our study differs from that of Dungan et al (2012) in that we use data on funds brought into Canada by migrants to investigate its effect on the exchange rate of Canada.…”

“…exchange rate find that while changes in the terms of trade explain movements of the exchange rate, the converse does not hold. Dungan et al (2012) employ a macroeconometric forecasting model to simulate the effect of a hypothetical increase in immigration on the Canadian economy. Their simulations suggest a positive impact of immigration on a number of variables including gross domestic product (GDP), aggregate demand, investment, productivity, government expenditures, taxes and net government balances.…”

“…Despite the fact that a number of studies investigate the impact of capital flows on the exchange rate (Calvallo & Ghironi, 2002, Elbadawi & Soto, 1997, Naceur, Bakardzhieva, & Kamar, 2012 among others) and remittances on the exchange rate (Acosta, Lartey, & Mandelman, 2009; Barajas, Chami, Fullenkamp, & Garg, 2010; Caceres & Saca, 2006), relatively little is known about how the money brought into host countries by immigrants affects the exchange rate of the host country. A study by Dungan, Fang, and Gunderson (2012) employs a macroeconometric forecasting model to investigate the macroeconomic effects on the Canadian economy of a hypothetical increase in immigration. While their simulations suggest a positive impact of immigration on a number of macroeconomic variables including gross domestic product (GDP), aggregate demand, investment, productivity, government expenditures, taxes and net government balances, the result with regard to the exchange rate is mixed.…”