DP875 | Immigration, Human Capital and Growth in the Host Country: Evidence from Pooled Country Data

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Immigration as a source of population growth is traditionally represented by neoclassical growth models with negative output and growth effects in per capita terms for the host economy. The reasoning behind this is the assumption of decreasing returns to labour in the production function. This paper explores how different these effects can be when the human capital brought in by immigrants upon arrival is explicitly considered in the Solow growth model augmented by human capital relative to natives. Both descriptive and econometric evidence for a sample of OECD economies is presented in order to evaluate the magnitude of such effects.