Dynamic macroeconomic implications of immigration

International immigration flows are large, volatile, and increasing. We document the dynamic implications of immigration, and account for the differential unemployment and labor force participation rates between immigrants and natives. To quantify the effects of immigration, we use Swedish population registry data and productivity estimates from a matched employer–employee dataset. A refugee (economic) immigration shock yields large initial negative (positive but delayed) effects on GDP per capita and employment rates, substantially larger than, but with the same sign as the corresponding steady state effects. This reflects the empirical fact that labor market integration is a gradual process over many years. • We quantify the dynamic macroeconomic effects of refugee immigration. • We use rich micro data from Sweden to calibrate our general equilibrium model. • The short-run effects differ substantially from the steady state effects. • Refugee immigration is found to decrease GDP/capita substantially and persistently.