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Should Germany Have Built a New Wall? Macroeconomic Lessons from the 2015-18 Refugee Wave

Christopher Busch, Dirk Krueger, Alexander Ludwig, Irina Popova, Zainab Iftikhar

NBER Working Paper No. 26973
Issued in April 2020
NBER Program(s):Economics of Aging, Economic Fluctuations and Growth, Labor Studies, Public Economics

In 2015-2016 Germany experienced a wave of predominantly low-skilled refugee immigration. We evaluate its macroeconomic and distributional effects using a quantitative overlapping generations model calibrated using German micro data to replicate education and productivity differentials between foreign born and native workers. Workers are modelled as imperfect substitutes in aggregate production leading to endogenous wage differentials. We simulate the dynamic effects of this refugee wave, with specific focus on the welfare impact on low skilled natives. Our results indicate that the small losses this group suffers can be compensated by welfare gains of other parts of the native population.

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Document Object Identifier (DOI): 10.3386/w26973

Published: Christopher Busch & Dirk Krueger & Alexander Ludwig & Irina Popova & Zainab Iftikhar, 2020. "Should Germany Have Built a New Wall? Macroeconomic Lessons from the 2015-18 Refugee Wave," Journal of Monetary Economics, .

 
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