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