Migration Fears, Policy Uncertainty and Economic Activity

Abstract

Motivated by the recent European migrant crisis, Brexit, and President Trump's immigration priorities, we provide new evidence into how migration fears and migration policy uncertainty affect macroeconomic outcomes across France, Germany, the United Kingdom, and the United States. We investigate the impact of immigration-related fear and uncertainty on economic activity via vector autoregression models. Our findings indicate that both indices are associated with decreases in industrial production in all countries except Germany. Surprise increases in immigration-related fears have negative influence on unemployment rates in these four countries too. We also show that innovations in the migration related uncertainty indices do not foreshadow significant declines in output.