Immigration raised native welfare in 14 of 17 economies under a modeled increase in inflows matching recent arrivals’ skills, a National Bureau of Economic Research working paper said in October.
The gains differed between lower-skilled and higher-skilled natives, with earnings driving the former and tax relief the latter, the authors found. NBER published “Modeling and Evaluating the Labor Market and Fiscal Effects of Immigration” in October 2026, without specifying a day.
The authors, Michele Battisti, Giovanni Peri and Eleonora Romano, modeled a one-percentage-point increase in immigrant inflows. They found that the direction and size of the welfare effect on natives varied across countries rather than producing a uniform result.
Their model combined labor-market effects with changes in public budgets, using calibration data for 17 Organisation for Economic Co-operation and Development countries over 2015-2019, the paper said. The authors evaluated inflows matching the skill composition of immigrants who arrived during 2019-2024.
Under that skill composition, native welfare increased in most of the economies studied, the authors found. In most cases, both lower-skilled and higher-skilled natives gained, although the mechanisms behind their gains differed, the paper said.
Lower-skilled natives benefited mainly from higher earnings before tax, the authors found. Their model linked those earnings gains to job creation and complementarity between lower-skilled native workers and skilled immigrants, the paper said.
Higher-skilled natives benefited mainly through lower labor-tax burdens, the authors found. The distinction meant that the gains for the two skill groups operated through different parts of the model, the paper said.
The results depended on immigrants’ skill mix, wage gaps between immigrants and natives, unemployment among residents and the progressivity of taxes, the authors found. Those factors shaped whether native welfare rose or fell, and by how much, across the countries studied.
The authors used a general-equilibrium model that included frictions in searching for workers and matching them with jobs, the paper said. It also incorporated progressive labor taxes specific to skill groups, capital taxation and public goods.
Immigration affects natives through both employment markets and public budgets, but researchers usually study those channels separately, the paper said. The authors’ approach brought them together to assess welfare effects within the same framework.
Assessing immigration policy therefore requires jointly modeling labor-market and fiscal channels, the authors said. Examining either channel alone gives an incomplete account of which native workers gain and the reasons for those gains, the paper said.
The findings reflect the authors’ views and do not necessarily reflect those of the National Bureau of Economic Research, the paper said.
