Migration in Europe and Its Economic Impact: A CGE Approach

Abstract

The objective of this paper is to examine whether the migration of refugees in Europe will be able to contribute to the economic development of both the countries of origin and destination. This is done by conducting a quantitative assessment of the potential economic impact of the migration of refugees in Europe at the macroeconomic and microeconomic levels using a global computable general equilibrium (CGE) model that takes into account bilateral migration blows. The simulation results of policy scenarios on migration of refugees in Europe are presented in terms of real GDP, equivalent variation (EV) as a measure of welfare, supply of and demand for unskilled and skilled labor, wages for unskilled and skilled labor, and domestic production by sector of the countries concerned. Major findings of this study are that the EU member states that accept migrants are predicted to gain an additional increase in real GDP and welfare, while the countries of source such as Middle East countries, North African countries and Sub-Saharan African countries are expected to lose in economic growth and welfare, because they lose the labor force and produce less goods and services.