The Economic Consequences of Immigration to Germany

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Helping refugees help the economy

There is thus not enough migration within the euro area to make the currency union adapt to the shocks and reduce unemployment rates sufficiently. Chancellor Angela Merkel has a historic chance to turn the refugee crisis into an opportunity for immigrants, for Germany and for Europe. Integrating large numbers of migrants is a huge challenge to society and to social cohesion.

Opening German borders to immigrants will change the economic and political balance in Europe for decades, as did the migration of Huguenots years ago. This article is published in collaboration with Bruegel. Publication does not imply endorsement of views by the World Economic Forum. Image: A German national flag is seen atop the Reichstag building. Guntram B.


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The views expressed in this article are those of the author alone and not the World Economic Forum. I accept. How do we build a sustainableworld?

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UK and German immigration: a tale of two very different laws

Immigrants would also need housing, benefiting the construction sector. In fact, countries with high immigration rates often run current account deficits, such as Spain in the s and the United States. The effect is unlikely to be as big in Germany — but additional workers will need capital and housing. Some fear that immigrants will dampen wage growth, and make it harder for euro area countries to regain much needed competitiveness relative to Germany.


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However, the empirical evidence on wage effects is inconclusive. Relatively low-skilled immigrants could even contribute to higher wages for skilled German workers. Qualified workers, such as nurses from Syria and Iraq, may however compete with German workers and potential immigrants from other euro area countries. More immigrants entering Germany from outside the EU could make it more difficult for migrants from other euro area countries to find a job there.

From to , more than half a million immigrants arrived in Germany from Spain, Italy, Portugal and Greece.

These numbers are small given the huge unemployment rates in Southern Europe. There is thus not enough migration within the euro area to make the currency union adapt to the shocks and reduce unemployment rates sufficiently. Chancellor Angela Merkel has a historic chance to turn the refugee crisis into an opportunity for immigrants, for Germany and for Europe. Integrating large numbers of migrants is a huge challenge to society and to social cohesion. Opening German borders to immigrants will change the economic and political balance in Europe for decades, as did the migration of Huguenots years ago.

Inside Germany's refugee crisis

This article is published in collaboration with Bruegel. Publication does not imply endorsement of views by the World Economic Forum. Image: A German national flag is seen atop the Reichstag building. Guntram B. The views expressed in this article are those of the author alone and not the World Economic Forum. I accept. How do we build a sustainableworld? Submit a video. Most Popular.