The Economic Impact of Migration on the European Countries

International migration to the EU Member States has increased signicantly over the past decades. Economists have tried to explain the effect of migration by looking at labour market outcomes such as income differentials and wage gaps between migrants and natives. However, few papers have investigated the impact of migration on economic growth. To address this gap, this thesis aims to make a contribution to knowledge by assessing whether there is any long-run relationship between migration and GDP per capita, and vice versa. In addition, this thesis examines the impact of migration on the European economies, taking into account their level of education and the effects of skill-based migration programmes on high-skilled migrants. First, to pursue these aims, we explore the long-run co-integration relationship as well as the short-run dynamics of 22 European countries by applying the ARDL bounding tests and the Granger causality tests. Results suggest that the associated equilibrium does not always conrm the existence of long-run relationship between GDP per capita and Immigration per capita. The direction of the relationship might\nbe unidirectional and bidirectional depending on the European country examined, leading to high heterogeneity in the results regardless of the countries' common history, migration policies and geographical position. Second, taking into account the contribution in terms of human capital of both high-skilled native and foreign-born migrants, we estimate a Solow-Swan model for a total of 22 European countries for the years 1990-2018. In this analysis we also consider the migration policies adopted each year by selected European countries, to observe possible effects yielded\nby these forms of intervention. The novelty of this work is that we observe how different polices affect the contribution to economic growth of the high-skilled native and foreign-born migrants. With this aim, we construct four different indexes that capture the direction of change in the level of openness of European countries toward migrants (restrictiveness to all migrants, to irregular migrants, and to low-skilled and high-skilled foreign-born workers). Our results suggest that migrants foster economic growth and promote income convergence among our set of European countries.