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The Effects of Migration on Growth and Unemployment in Developed Countries: A Panel Autoregressive Distributed Lag Analysis

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  • Ismail Hakki İscan

    (Bilecik Seyh Edebali Universitesi, Iktisadi ve Idari Bilimler Fakultesi, Iktisat Bolumu, Bilecik, Turkiye)

  • Tugba Demire

    (Bilecik Seyh Edebali Universitesi, Lisansustu Egitim Enstitusu Mudurluğu, Iktisat Anabilim Dali, Bilecik, Turkiye)

Abstract

Economic and security concerns are among the leading factorsthat causemigration. According to theUnitedNations(UN), more than 280 million people engaged in international migration in 2020. UN data indicate that more than half (52%) of those who migrated in 2020 targeted developed countries. This circumstance highlights the urgency of considering the economic consequences of migration in these countries. Accordingly, the aim of this study is to analyze the effects of migration on economic growth (measured by means of gross domestic product or GDP) and unemployment in OECD countriesforthe period 2000–2019. Panel Autoregressive Distributed Lag (ARDL) and Panel Vector Error Correction Model (VECM) causality analyses are applied to determine relationships and their directions. The resultsreveal a longterm and statistically significant relationship between migration and economic growth, wherein 1% increase in migration level is associated with a 0.43% increase in GDP. A long-term and statistically significant relationship between migration and unemployment is also established wherein 1% increase in migration level appears to decrease unemployment by 0.53%. Panel VECM causality analyses confirm one-way relationships from migration to GDP and from migration to unemployment. These results demonstrate that migration in OECD countries in the period 2000–2019 contributed to economic growth due to migrants’ investments in target countries and reducing unemployment by establishing employment opportunities. Accordingly, considering that migration provides economic growth and reduces unemployment, it is essential for future studies to examine the nature of the individuals migrating at an empirical level to determine appropriate policies.

Suggested Citation

  • Ismail Hakki İscan & Tugba Demire, 2021. "The Effects of Migration on Growth and Unemployment in Developed Countries: A Panel Autoregressive Distributed Lag Analysis," EKOIST Journal of Econometrics and Statistics, Istanbul University, Faculty of Economics, vol. 0(35), pages 181-203, December.
    • Handle: RePEc:ist:ekoist:v:0:y:2021:i:35:p:181-203
    DOI: 10.26650/ekoist.2021.35.1014765
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