An October National Bureau of Economic Research paper models an immigration increase across 17 economies, with gains for native residents in 14 when labor-market and fiscal effects are assessed together.
The study, Modeling and Evaluating the Labor Market and Fiscal Effects of Immigration, is NBER Working Paper 35901, issued in October 2026. Its authors are Michele Battisti, an economics professor at the University of Glasgow; Giovanni Peri, an economics professor at the University of California, Davis; and Eleonora Romano, a consultant to the World Bank.
In the paper’s scenario, immigrant inflows rise by one percentage point and new arrivals take the skill mix recorded for people who arrived between 2019 and 2024. The 14-of-17 finding comes from a simulation; it does not describe observed welfare changes.
For the model’s baseline, Battisti, Peri and Romano used 2015–2019 data from 17 Organisation for Economic Co-operation and Development (OECD) countries. The framework includes job-search frictions, progressive labor taxes that vary by skill, capital taxation and public goods. It accounts for obstacles workers face in finding jobs as well as how taxes and public spending shape the effects.
A fiscal-only calculation would omit changes in residents’ employment and pay, the authors argue. Their framework also traces how earnings shifts affect tax collections, placing labor-market changes alongside public-budget effects.
In most model cases, both lower- and higher-skilled native workers benefit, though through different channels. For lower-skilled natives, the main modeled benefit is stronger pretax pay associated with job creation and complementary skills. For higher-skilled natives, it is a reduction in labor taxes.
The direction and size of the result depend on immigrants’ skills, wage differences between immigrant and native workers, unemployment among existing residents and the progressivity of labor taxes.
