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Immigration and GDP nexus: is the association asymmetric?

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Abstract

The association between economic growth and immigration has been a long-time debatable area among economists. Yet, the asymmetric connection stays somewhat ignored area in this strand of the literature. The investigation of a nonlinear and asymmetric relationship between economic growth and immigration is motivated by empirical insights. The structural change and resulted nonlinear behavior in the real GDP per capita and immigration series is due to idiosyncratic shocks in data. Events such as the global financial crisis (2008–2009), Asian currency crisis (1997–98), Dot-com bubble burst (2001), and sudden extreme events (terrorist attack on September 11, 2001) can cause structural breaks in the series and exhibit nonlinear behavior. Thus, in this paper we examine the asymmetric association of the immigration-GDP per capita nexus via utilizing the nonlinear autoregressive distributed lag model (NARDL). The asymmetric influence of GDP was generated by the disintegrations of GDP into positive and negative changes. The paper finds evidence of long-run relationship (cointegration), using annual data from 1947- 2018. The empirical analysis presents verification of long- and short-run asymmetric effect. The paper finds that positive shocks of real GDP per capita affects immigration, while no such effect is found for the negative changes, both in the short- and long-run. Finally, the vector error correction model (VECM) illustrates significant long-and short-run unidirectional causality running from positive change of GDP per capita to immigration. However, the VECM model suggests a significant long-run bidirectional causality between immigration and GDP per capita decrease.

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Notes

  1. See for example: Kisswani (2021a, b), Kisswani and Elian (2021), Kisswani et al. (2020), Kisswani (2019), Kisswani and Kisswani (2019), Kisswani et al. (2019), and Kisswani (2017), among many others.

  2. See: Ahmed et al. (2021a, b, c) for more details.

  3. We tested the effect of immigration on real GDP per capita. The results didn’t support any effect, whether through the linear or nonlinear ARDL modelling. Such results are in line with Morley (2006). Results are available upon request.

  4. However, if any of the positive or negative shock is insignificant, then no need to apply the Wald test as this indicates asymmetric effect (see for example Kisswani, 2021a, b; Kisswani and Elian, 2021; Kisswani et al., 2020; Kisswani, 2019; Kisswani and Kisswani, 2019; Kisswani et al., 2019; and Kisswani, 2017, among many others).

  5. To maintain space, we didn’t discuss at this point the specifics of the unit root tests. For more information, see Dickey and Fuller (1979; 1981), and Zivot and Andrews (1992).

  6. Examples of such unexpected events are: oil embargo in 1973, change of regime in Iran 1978, Asian financial crisis in 1997, September 11 attacks in 2001, US subprime mortgage crisis in the years 2007 and 2008.

  7. For more details, see Bai and Perron (1998)

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Acknowledgements

The authors would like to thank the editor and anonymous reviewers for their helpful comments, which improved the quality of this research.

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Correspondence to Khalid M. Kisswani.

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Table 7 Average growth comparison

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Table 8 Descriptive statistics

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Kisswani, K.M., Khan, S. Immigration and GDP nexus: is the association asymmetric?. Econ Change Restruct 56, 215–236 (2023). https://doi.org/10.1007/s10644-022-09420-5

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