THE MACROECONOMIC EFFECTS OF IMMIGRATION - ISRAEL IN THE 1990S

The authors perform counterfactual simulations using an econometric mo del to estimate the macroeconomic effects of immigration in Israel. Th e model takes account of immigrant assimilation in labor and housing m arkets. They argue that wage flexibility was the key to success in imm igrant absorption. In addition, the animal spirits of entrepreneurs co nsolidated this success. House prices, GDP, consumption, investment, u nemployment and imports would have been considerably lower but for the immigration, while real wages would have been higher. The main benefi ciaries were capitalists owning housing and businesses. The main loser s were workers who were not owner-occupiers.