AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Labor Supply Shocks and Capital Accumulation: The Short- and Long-Run Effects of the Refugee Crisis in Europe
AEA Papers and Proceedings
vol. 113,
May 2023
(pp. 577–84)
Abstract
European countries experienced a large increase in labor supply due to the influx of Ukrainian refugees after the 2022 Russia invasion of Ukraine. We study its dynamic effects in a spatial model with forward-looking households of different skills, trade, and endogenous capital accumulation. We find that real GDP increases in Europe in the long term, with large distributional effects across countries and skill groups. In the short run, an increase in the supply of labor strains the use of capital structures that takes time to build. Over time, countries that build capital structures increase output, resulting in potential long-run benefits.Citation
Caliendo, Lorenzo, Luca David Opromolla, Fernando Parro, and Alessandro Sforza. 2023. "Labor Supply Shocks and Capital Accumulation: The Short- and Long-Run Effects of the Refugee Crisis in Europe." AEA Papers and Proceedings, 113: 577–84. DOI: 10.1257/pandp.20231077Additional Materials
JEL Classification
- E22 Investment; Capital; Intangible Capital; Capacity
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- J22 Time Allocation and Labor Supply
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J82 Labor Standards: Labor Force Composition