Dynamic Macroeconomic Implications of Immigration

International immigration flows are large, volatile and increasing. To our knowledge, we are the first to document the dynamic implications of immigration in a search and matching framework. To quantify these effects in general equilibrium, we use Swedish population registry data and productivity estimates from a matched employer-employee dataset. A refugee (economic) immigration shock yields large initial negative (positive) effects on GDP per capita and employment rates, substantially larger than corresponding steady state effects, in line with the microdata. To alleviate the consequences of a refugee shock, policies affecting structural unemployment are important, e.g., benefit cuts and improved integration.