IMMIGRATION AND PRODUCTIVITY IN THE OECD COUNTRIES

We identify the impact of immigrants on income and productivity of the OECD countries using the remarkable changes from 1960 to 2005 in the cross-sectional distribution of the ratio of immigrants over natives. Our approach is based on the aggregate production function that we combine with panel estimations to channel out the aggregate impact of immigration through its effect on total factor productivity (TFP), on capital-output ratio, on human capital and employment rate. We find that immigration exerts a positive impact on income and productivity with the TFP being the main channel of transmission. Our results are robust to the joint determination of immigration and productivity.