This thesis consists of three papers to analyse the effect of migration dynamics on open economies. Each study examines a different topic of migration in a macroeconomic context using a dynamic stochastic general equilibrium (DSGE) model.
The first paper analyses the effect of an increase to migration on the macroeconomy and to native citizens. The analysis employs a structural vector autoregression (SVAR) and a DSGE model to analyse the effect of a migration shock on the macroeconomy and fiscal budget in per native terms. Analysis features a constructed dataset for the native population using population and net migration statistics for Germany. The DSGE model diverts from the standard per capita terms to have variables for the macroeconomy and native household in per native terms and the variables specific to the migrant household in per migrant terms.
The second paper features a DSGE model of a small open economy with asymmetric search and matching frictions to study brain waste and increased migration following a relaxation of migration policy. To show the gains from eliminating brain waste, the differences between natives and migrants are eliminated. A SVAR provides empirical analysis of the effects from a migration shock. These models use data from Canada, a country that has recognised brain waste on a microeconomic level.
The final paper analyses the effect of migration policies in a two-country DSGE model. The two countries are asymmetric, beginning with their profiles as an oil-producer country and an oil-consumer. The migration decision for agents in the resource cursed country is endogenous and depends on the job finding probabilities net of migration costs. The model uses occasionally binding migration constraints to evaluate the role of migration policies. The model is estimated using data from Venezuela and the United States.
The results presented in each of the papers show that immigration has a small but statistically significant positive effect for an economy empirically and theoretically. For the final paper, migration policies had negative effects in both countries by preventing the oil-consumer from maximising the labour force and the sending country by keeping unemployment high and draining fiscal resources.
