IMF Working Papers

Migration into the EU: Stocktaking of Recent Developments and Macroeconomic Implications

By Francesca Caselli, Huidan Huidan Lin, Frederik G Toscani, Jiaxiong Yao

September 27, 2024

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Francesca Caselli, Huidan Huidan Lin, Frederik G Toscani, and Jiaxiong Yao. "Migration into the EU: Stocktaking of Recent Developments and Macroeconomic Implications", IMF Working Papers 2024, 211 (2024), accessed December 14, 2024, https://0-doi-org.library.svsu.edu/10.5089/9798400289552.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Against the backdrop of the war in Ukraine, immigration into the European Union (EU) reached a historical high in 2022 and stayed significantly above pre-pandemic levels in 2023. The recent migration has helped accommodate strong labor demand, with around two-thirds of jobs created between 2019 and 2023 filled by non-EU citizens, while unemployment of EU citizens remained at historical lows. Ukrainian refugees also appear to have been absorbed into the labor market faster than previous waves of refugees in many countries. The stronger-than-expected net migration over 2020-23 into the euro area (of around 2 million workers) is estimated to push up potential output by around 0.5 percent by 2030—slightly less than half the euro area’s annual potential GDP growth at that time—even if immigrants are assumed to be 20 percent less productive than natives. This highlights the important role immigration can play in attenuating the effects of the Europe’s challenging demographic outlook. On the flipside, the large inflow had initial fiscal costs and likely led to some congestion of local public services such as schooling. Policy efforts should thus seek to continue to integrate migrants into the labor force while making sure that the supply of public services and amenities (including at the local level) keeps up with the population increase.

Subject: Aging, Labor, Labor force, Labor markets, Migration, Population and demographics

Keywords: Aging, European Union, Labor force, Labor markets, Labor Markets, Migration, Migration

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