## THE MACROECONOMIC EFFECTS OF GLOBAL MIGRATION — April 2020 WEO Chapter 4

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### Motivation and recent trends
- Migration has been rising steadily; majority of the public holds a positive view of immigration but many misconceptions persist (April 2020 WEO Chapter 4).
- Stock of migrants by corridors increased between 1990 and 2019 across AEs to AEs, EMDEs to AEs, and EMDEs to EMDEs (millions reported in source charts).
- Refugee migration increased following rising conflicts; refugees were concentrated in Emerging Market and Developing Economies (EMDEs) with refugee counts and shares rising through 2018.

### Stylized facts and drivers of migration
- Migration is largely regional, but cross-regional migration is also important (flows by region reported for 2010–2020 and projections to 2050).
- Falling income gaps and poverty in EMDEs alongside demographic divergences: fewer low-income countries; young and growing populations in EMDEs versus stable or declining populations in AEs.
- Gravity model results (push and pull factors):
  - Positive pull of destination income; ambiguous push of origin income.
  - If migration costs were equal across country pairs, high-income countries (AEs) would attract virtually all migration.
  - Higher income at origin is associated with lower emigration only if income is not too low (poverty trap).
- Determinants highlighted: contiguous borders, distance, common language, colonial link, income destination, income origin, income gap × young population share, young population origin, war, migrant networks.
- Additional empirical patterns:
  - Migrant networks reduce immigration costs.
  - Natural disasters including extreme temperatures and storms have small effects on emigration.
  - In OECD countries, stricter entry requirements and fewer integration measures are associated with reduced immigration.
  - Skilled migrants follow the skill premium; common border, diaspora networks and shorter distances tilt migration toward lower-skilled migration; common language increases high-skill immigration.

### Migration scenarios and projections (2020–2050)
- Baseline scenario: global migration pressure remains roughly stable as a share of world population; migration pressures from EMDEs to AEs continue rising.
- Baseline assumptions include income convergence toward the United States (Real GDP per capita share of US GDP per capita shown for regions) and United Nations population projections; migrants defined as foreign-born population.
- Alternative scenarios:
  - 1 percentage point higher growth in EMDEs reduces emigration from North Africa and the Middle East but increases it slightly out of Sub-Saharan Africa (poverty trap).
  - Under the IPCC high-emission scenario, emigration increases from all EMDEs except Sub-Saharan Africa (poverty traps); climate change expected to increase within-region migration, but impact on long-distance migration is unclear.
- Charts report deviations from baseline (percent) and baseline migration stocks in 2050 (millions), broken down by region.

### Macroeconomic effects of immigration on recipient countries (empirical findings)
- Large immigration waves into Advanced Economies (AEs):
  - Episodes of large inflows measured relative to recipient countries’ population; instrumental variables used: networks of past migrants and distance from origin.
- Estimated impacts in AEs (impulse response estimates; 90 percent confidence intervals):
  - A 1 percentage point increase in immigration inflow relative to total employment:
    - Increases output by almost 1 percent by the fifth year.
    - Effect is driven by rising productivity (immigrants/natives complementarities) and investment.
    - No effect on aggregate native employment.
  - Reported variables with year 1 and year 5 responses include output, employment, labor productivity, TFP, employment of natives, capital-labor ratio.
- Refugee immigration in EMDEs: no detectable effects on output identified; possible reasons include lack of selection by destination, legal/physical barriers to work.
- Case studies / regional impacts:
  - Germany: immigration more than offset negative demographic trends; wages explained by inflation expectations, productivity, and labor market slack unrelated to immigration; competition effects on highly substitutable workers were present but offset by complementarity effects.
  - Migration from Venezuela impacts Latin America and the Caribbean:
    - Short-term public spending pressures: 0.5 percent of GDP in Colombia by 2024, 0.4 percent in Ecuador, 0.3 percent in Peru, and 0.1 percent in Chile.
    - Equilibrium models estimate Venezuela’s migration raises GDP by 3 to 5 percentage points between 2017 and 2027, driven by expansion of the labor force and investment.

### Policies that shape outcomes
- Policies enhancing benefits from immigration:
  - Higher spending on adult vocational training and on active labor market policies is associated with greater employment growth after immigration shocks.
  - Integration measures (postentry rights, language training, work permits) and active labor market policies improve employment outcomes.
- Policies identified to improve refugee labor market outcomes: work permits, language training, physical and mental health support, shorter refugee recognition processes, shorter stays in asylum accommodations.
- Fiscal policy recommendation: strive to equitably redistribute aggregate gains from immigration.
- Restrictiveness trends (1980–2014):
  - Entry and integration policies show liberalization trends while border control policies have tightened over time.
  - The last two decades saw a rise in migration policies aimed at selecting high-skill immigrants.
  - The policy indices measure integration (postentry rights), entry and stay (permits/regularizations), and border control (surveillance, detention, sanctions); index normalized to zero in 1980.

### Simulation of global effects and decomposition
- Model calibration assumptions: baseline migration scenario; native population using UN projections; immigration raises TFP; immigrants’ productivity increases over time.
- Results:
  - Migration adds 2pp to global GDP by 2050.
  - Migration counterbalances population aging in AEs.
- Decomposition of past flows (1990–2015):
  - Population and economic growth in EMDEs drove the rise of migration from EMDEs to AEs between 1990 and 2015.
  - Economic development in origin countries both provided means to migrate to AEs and reduced incentives to emigrate within EMDEs.
  - Decomposition attributes changes in migrant numbers by corridor to income destination, income origin (including poverty trap), population origin, and income gap × young population.

### Interaction with automation and labor market adjustment
- Natives’ employment shifted away from routine occupations; immigrants took low-paying jobs with medium exposure to automation.
- Natives upgraded skills, moving into higher-paying occupations with lower exposure to automation.
- Empirical evidence from 15 European countries (1998–2010) using RTI (routine task intensity) index: changes in occupational employment shares for native and foreign-born employees and by pay-level occupations (bubbles sized by 2010 employment share).

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_Source: https://www.imf.org/-/media/files/oap/oap-home/2020/weo-april-2020-migration-outreach-v2.pdf_