Nicolo Maffei-Faccioli (UAB, BGSE and IGIER, Bocconi University) and Eugenia Vella (University of Sheffield and MOVE)
Abstract: We provide empirical evidence suggesting that net migration shocks can have substantial demand effects, potentially acting like positive Keynesian supply shocks. Using monthly administrative data (2006-2019) for Germany in a structural VAR, we show that the shocks stimulate job openings, wages, house prices, investment, net exports, and output. Unemployment falls for natives (job-creation effect), driving a decline in total unemployment, while rising for foreigners (job-competition effect). The geographic origin of migrants and the education level of residents matter crucially for the transmission. Overall, the evidence suggests that the policy debate should focus on redistributive strategies between natives and foreigners.