Macroeconomic Impact of Migrations in Madrid Region

1
Macro-economic Impact of Migrations in Madrid
Region

• INTRODUCTION
• Centre of Migration Research,
• Warsaw, November 2007
• Dr. Mahía Dr. de Arce
• Professors Univ. Autónoma de Madrid

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WHY DO POLICY-MAKERS NEED MODELS? Reference
paper Piermartini, R. and Teh, R. (2005)
Demystifying Modelling Methods for Trade
Policy. WTO Discussion Papers, num. 10.
September, 2005.

• Economic models provide a theoretically
  consistent, rigorous and quantitative way of
  evaluating different policy analysis
• A simulation of the model can confirm that
  judgment and provide estimate of the likely gains
• Models can alert about effects in inter-related
  issues
• But, whats first?

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EXPONENTIAL GROWTH

• Advances in theoretical analysis
• Largeness and wideness Statistical collection
• Increase of Computational power

4
STRENGTHS

• Reflects Inter-dependency of economic variables
• Computer based models allow us to track all of
  these interactions
• Simulation of several scenarios is available
• Simulations are performed in a transparent
  hypothesis frame
• They discipline thinking about how economies
  actually work

Reference paper Piermartini, R. and Teh, R.
(2005) Demystifying Modelling Methods for Trade
Policy. WTO Discussion Papers, num. 10.
September, 2005.
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LIMITATIONS

• Aggregations can obscure important underlying
  relationships
• Data are not always high quality
• Responsiveness of supply and demand to price
  changes are not necessarily accurate
• Choices among scenarios and model specification
  can imply very different results
• Technical comprehension is only available for
  experts

Reference paper Piermartini, R. and Teh, R.
(2005) Demystifying Modelling Methods for Trade
Policy. WTO Discussion Papers, num. 10.
September, 2005.
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CHOICE THE MODEL

• COMPARATIVE STATIC AND DYNAMIC ANALYSIS
• Static changes in policies and direct
  transmission to endogenous variables of model
• Dynamic final and intermediate process of change
• PARTIAL OR GENERAL EQUILIBRIUM ANALYSES
• Ceteris Paribus criteria
• Whole economy linkages

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KIND OF THECNICAL STRATEGIES FREQUENTLY USED IN
INTERNATIONAL SIMULATIONS

• Traditional Econometrical Multiequational Models
• Optimization Models Izquierdo, M., Jimeno, JF.
  and Rojas, JA (2007) On the Aggregate Effects
  of Immigration in Spain. Banco de España Working
  Papers.
• Gravitational Models
• Panel Data Models
• Leontief Based Models (I-O Models) Vicens et al.
  (2005) Impacto Macroeconómico de la Inmigración
  en la Comunidad de Madrid.
• Social Account Matrix Models

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Inmigration Model Comunidad de Madrid 2005

• STARTING POINT
• More than 12 of Employed population are
  immigrants in Comunidad de Madrid
• Majority of immigrants have come to CM in last
  five years
• Estimation of economic aspects of immigration in
  Spanish Comunidad de Madrid in last five years

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Immigration CM Model Schema
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Main Outputs in CM Model

• Estimation of the Total Number of Immigrants in
  Comunidad de Madrid
• Estimation of wages in immigrant population
  (sector distribution and formal and informal
  differences)
• Simulation Model An unrealistic Economy without
  Immigrants Gosh I-O Model
• Productivity aspects in the whole economy
• Firms Margins derived from immigrants activities
• Indirect Effects in domestic employment derived
  from immigrants activities (production and
  consumption)
• Public sector issues about Immigration revenues
  and expenditures. Vital Cycle considerations in
  Fiscal Balance
• Remittances of immigrants estimation domestic
  financial sector implications and remittances
  destination considerations

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Ghosh Supply Model (I)

• Distribution Coefficients delivers of sector
  i to sector j over total Outputs of sector
  i. Sells structure of each sector
  (interdependence between sectors)

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Ghosh Supply Model (and II)

• Followed from previous coefficients and in the
  same terms that Leontief Model, we can build one
  expression to impact from Value Added to Total
  Production
• x' VA(I-D)-1 (TrMTaxes)D(I-D)-1

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Value Added and Employment Generation from Ghosh
Production Static vs. Dynamic coefficients of VA
and Employment
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I-O Ghosh Model Implementation Production Effect
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Leontief I-O Model Implementation Demand Efect
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MAIN RESULTS