Research
Working Papers/Works in Progress
A Native Perspective of Migration
In this paper, I analyse the macroeconomic effects of migration in a VAR and an estimated DSGE model using data from Germany. The focus of the paper is the estimated stochastic growth DSGE model which is a small open economy setting. The model put forth features four types of agents: 2 separate households, perfectly competitive firms, and a fiscal authority. The aim is to investigate the effect of an exogenous migration shock in the host country, from a native perspective. The migration shock first affects the growth rate of the existing pool of migrants, then as migrants acquire the characteristics of natives and longer-term residents, the growth rate of natives. The VAR assesses and contrasts the effects of migration in per capita and per native terms using specific types of government consumption, and macroeconomic variables. Results from the theoretical model show that there are positive effects on the economy. Where migration shows a small but significant effect on per native GDP, consumption, and investment such that migration shocks matter but are not drivers of the business cycle.
Previously presented as "Migration in a Small Open Economy: A Native Perspective" and "A Native Perspective of Migration in a Small Open Economy".
Brain waste occurs when migrants experience underemployment, tougher labour market conditions, and higher involuntary unemployment relative to natives. To investigate the macroeconomic effects of brain waste, and increases in migration, this paper employs a structural vector autoregression (SVAR) and an estimated dynamic stochastic general equilibrium (DSGE) model of a small open economy using asymmetric search and matching frictions. Agents include high-skill and low-skill natives and migrants; firms and a fiscal authority. The high-skilled migrants have the option to skill-downgrade in search of employment. We assess the effects of a migration shock to an economy with brain waste, the effectiveness of fiscal policies designed to reduce brain waste, and to an economy without brain waste. The SVAR model empirically analyses the impact of migration on the macroeconomy using data from the national accounts including government finances. The results indicate that increases to net migration are expansionary for the economy though small and statistically significant. Reducing the effects of brain waste offers further expansions to the macroeconomy, and fully eliminating brain waste for new and landed migrants is optimal with analysis finding the gains would be in terms of output (2.9%), private consumption (4.1%), investment (5.9%), and aggregate employment (2.8%).
Previously circulated as The Migrants’ Plight: A Skill-Job Mismatch
The Resource Curse and Migration
Under Review
Draft available by request
The future of East to West European Migration
The number of robots employed by firms and productivity of robots is increasing at a growing rate which differs between countries. The automation of tasks by robots is a labour saving technology. Some countries are experience higher rates of automation, in effect leaving increased productivity gaps. Germany is the highest producer and consumer of automation technology in Europe. The risks of automation to jobs is focused towards low-skill sector yet automation replaces low-skill workers and increases the need for highly-skilled workers. To assess the role of these factors and combining the uncertainty over migration flows and automation, we construct an estimated DSGE model with endogenous migration decisions in a two-country setting and the role of automation on high and low-skilled migration.
A panel VAR analysis of migration in Europe
Migration flows for European countries are an important factor to the economy, whether net receivers or senders of migrants. With such differing migratory and macroeconomic profiles within Europe, one migration model can't fit all. To examine the effects of migration shocks, we empirically analyse the effects of net migration on the macroeconomy, government finances, and the labour market in panel VAR models using mixed frequency data across Europe. We group the selected European countries into four categories based on macroeconomic and migration characteristics enabling a larger number of countries to be included in the analysis. The results show that net (e)migration matters for an economy with different countries better able to absorb the shocks. The fiscal policy implications are extended to assess the flows of migration, including push and pull factors from the labour market. (under review)
Can migration solve labour market shortages?
More details coming soon
My research focus is on work package 9 "To develop innovative methodology for dealing with migration uncertainty across a range of time horizons, from early warnings for the short-term migration events, to uncertain scenarios over longer time perspectives" There are four main deliverables in work package 9.
In this paper, we provide a background discussion and a proposal of methods for quantifying migration-associated uncertainty across a range of time horizons, which cover both prediction and scenarios of migration in the mid- to long-term, as well as early warning systems in the short term. Following a brief review of the state of the art in forward-looking migration studies, we explore the analytical possibilities offered here by macroeconomic approaches, such as the Dynamic Stochastic General Equilibrium (DSGE) models. While such models have been used to model the impacts of migration on the wider economy, we propose to look at their potential in addressing the influence of drivers on migration flows, with particular focus on the reactions of migration to economic and political shocks. The discussion is illustrated by selected empirical examples pertaining to migration within and into Europe.
In this report, we propose ways of looking at the uncertainty of migration forecasts and scenarios across a range of time horizons, through the lens of macroeconomic modelling. As an illustration, for short-term horizons, we present the results of empirical models aiming to assess different aspects of the uncertainty in migration and economic dynamics following exogenous shocks. To that end, we estimate Bayesian panel vector autoregressive (VAR) models to generate forecasts, which can be also used in scenario-setting. We also examine the effects of an exogenous increase to migration on the macroeconomy. By looking at the forecast errors for different migration indicators, and for a range of models and groups of European countries, we assess the usefulness of VAR models for generating short- and long-range migration forecasts and scenarios and for estimating their uncertainty. For longer horizons, we also look into dynamic stochastic general equilibrium (DSGE) models, which are used here to generate theoretically-informed migration scenarios. In particular, we look at a scenario of job automation, examining inequalities in migration processes, either modelled as exogenous or, in a two-country model, with fully endogenous migration decisions, depending on the labour market conditions and costs. The results of modelling offer coherent migration scenarios and provide a tool for assessing the uncertainty of both migration and its impacts. We also identify and discuss several important remaining research gaps and methodological challenges of using modern macroeconomic approaches for forward-looking migration studies, and propose some practical solutions.
Forecasting asylum crises is challenging, though researchers have tried to use early warning systems (EWS) since the surge in asylum migration to Europe in 2015/16. The situation repeated after the 2022 Russian invasion of Ukraine. We present a model that shows that the warning signs of a crisis could occur using publicly available data sources. We propose and test an EWS that would be effective for policy makers, and that would give sufficient warning that authorities can be prepared. Updated version (2023)
The European Single Market provides a common market for goods, labour, services, and capital. One of the most legislated has been labour, or more generally persons, which permits unrestricted immigration. This has been an issue with the expansions to include countries that have significantly lower GDP per capita. The Southern and Eastern Enlargements have permitted transition periods which countries can limit immigration. In this note, we provide a concise timeline of the expansion of free movement of persons. (submitted)
A revision of D9.5. The research is available at Open Research Europe which uploads different versions of the document. This piece of qualitative research uses the foundations of D9.5. The second version (2023) includes the updated candidate countries (CC) and potential candidate country (PCC). The most notable changes are the inclusion of Moldova and Ukraine as CC, and Georgia as a PCC.
Policy Briefs
Can one migration model fit all? Population Europe - Policy Insight. (Co-authored with Jakub Bijak)
Who cares about uncertainty in migration flows? Population & Policy Compact 35/2022. (Co-authored with Jakub Bijak, Valentina Di Iasio, and Jackie Whaba)
Book Chapter
The Economics of Brain Waste (2020) in Understanding Migration with Macroeconomics (ed J. Caballé, J. Llull and E. Vella) Chapter 4 pp 87-113 ISBN: 978-3-030-40980-7 DOI:10.1007/978-3-030-40981-4_4