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The Long-Run Effects of Immigration: Evidence across a Barrier to Refugee Settlement

Author

Listed:
  • Ciccone, Antonio

    (University of Mannheim)

  • Nimczik, Jan Sebastian

    (European School of Management and Technology (ESMT))

Abstract
After the end of World War II in 1945, millions of refugees arrived in what in 1949 became the Federal Republic of Germany. We examine their effect on today's productivity, wages, income, rents, education, and population density at the municipality level. Our identification strategy is based on a spatial discontinuity in refugee settlement at the border between the French and US occupation zones in the South-West of post-war Germany. These occupation zones were established in 1945 and dissolved in 1949. The spatial discontinuity arose because the US zone admitted refugees during the 1945-1949 occupation period whereas the French zone restricted access. By 1950, refugee settlement had raised population density on the former US side of the 1945-1949 border significantly above density on the former French side. Before the war, there never had been significant differences in population density. The higher density on the former US side persists entirely in 2020 and coincides with higher rents as well as higher productivity, wages, and education levels. We examine whether today's economic differences across the former border are the result of the difference in refugee admission; the legacy of other policy differences between the 1945-1949 occupation zones; or the consequence of socio-economic differences predating WWII. Taken together, our results indicate that today's economic differences are the result of agglomeration effects triggered by the arrival of refugees in the former US zone. We estimate that exposure to the arrival of refugees raised income per capita by around 13% and hourly wages by around 10%.

Suggested Citation

  • Ciccone, Antonio & Nimczik, Jan Sebastian, 2022. "The Long-Run Effects of Immigration: Evidence across a Barrier to Refugee Settlement," IZA Discussion Papers 15185, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15185
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    References listed on IDEAS

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    1. Schaffner, Sandra, 2020. "FDZ data description: Real-estate data for Germany (RWI-GEO-RED v3) - Advertisements on the internet platform ImmobilienScout24. 2007-06/2020," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 242996.
    2. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
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    Cited by:

    1. Valentin Lang & Stephan A. Schneider, 2023. "Immigration and Nationalism in the Long Run," CESifo Working Paper Series 10621, CESifo.
    2. Eder, Christoph & Halla, Martin & Hilmbauer-Hofmarcher, Philipp, 2024. "The Long-Term Effects of Military Occupations: Evidence from Post-World War II Austria," Department of Economics Working Paper Series 366, WU Vienna University of Economics and Business.
    3. Donges, Alexander & Streb, Jochen, 2024. "How the West was Settled. The Location Choice of East German Companies Migrating to West Germany after World War II," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302389, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    immigration; productivity; wages; refugees; long-run effects;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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