Essays on Macroeconomics of Immigration

Takehiro Kiguchi

Research output: ThesisDoctoral Thesis

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This thesis analyzes the dynamic macroeconomic effects of immigration. Chapter 1 provides an overview of this thesis.

Chapter 2 empirically examines the effects of immigration by interpreting shocks to unanticipated changes in working population as immigration shocks and identifying the shocks using a VAR with sign restriction. We find that immigration shocks are not associated with rises in non-residential investment or short-run reductions in average wages. We also show how a neoclassical growth model with a CES production function where migrant labor and capital are complements to skilled domestic labor and substitutes to each other can produce responses closer to those in the VAR.

Chapter 3 examines theoretically the macroeconomic effects of immigration on labor market outcomes, especially labor share, for alternative assumptions on the bargaining power of workers using a New Keynesian model with labor market frictions and heterogeneous unemployed workers. Unemployed workers are heterogeneous in the sense that some of them are short-term unemployed (insiders), the others are long-term unemployed (outsiders). We find that, when immigrants enter as outsiders and reduce the bargaining power of workers, labor share of national income shows a hump-shaped decline, which is in line with empirical evidence by a VAR analysis.

Chapter 4 analyzes theoretically the macroeconomic impacts of a policy of increasing immigration in response to an unexpected increase in its debt to GDP ratio. We find that there is indeed a potential for a policy to boost economic activity of increased debt without increasing the present value of budget deficits if the expected tax revenue from future increased population growth is spent effectively on productive public capital at the correct time.
Original languageEnglish
Awarding Institution
  • Royal Holloway, University of London
  • Mountford, Andrew, Supervisor
Award date1 Sept 2015
Publication statusUnpublished - 2015

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