Immigration Policy and Macroeconomic Performance in France

This paper quantitatively assesses the interaction between permanent immigration intoFrance and France's macroeconomic performance as seen through its GDP per capita and itsunemployment rate. It takes advantage of a new database where immigration is measuredby the flow of newly- issued long-term residence permits, categorized by both thenationality of the immigrant and the reason of permit issuance. Using a VAR modelestimation of monthly data over the period 1994-2008, we find that immigration flowsignificantly responds to France's macroeconomic performance: positively to the country'sGDP per capita and negatively to its unemployment rate. At the same time, we find thatimmigration itself increases France's GDP per capita, particularly in the case of familyimmigration. This family immigration also reduces the country's unemployment rate,especially when the families come from developing countries.