The aim of this study is to investigate whether migration affects Austrian economic growth. Migration is seperated into total and foreign migration. The framework of this analysis is the Neoclassical Solow-Swan model. Analogous to the main results of this model, the two types of – convergence and an augmented version of the model regarding the two migration variables will be tested.
The empirical work is based on a data set especially created for Austria, which covers the time period from 1961 to 2002. This data set provides a clear tendency towards absolute convergence. The test of conditional convergence verifies that the Austrian federal states started at different technological status and converge at a speed of 3, 54% per year. Furthermore, this test points out that the Solow-Swan models findings are not asserted, but some of the variables help to improve the results of the test.
The augmented model, which includes the migration variables, leads to the conclusion, that total migration in Austria has a positive and highly significant influence on the growth of GDP per capita, while foreign migration also suggests the positive relationship but only at a 10% level of significance.
Table of Contents
1. Introduction
2. The Solow-Swan model of economic growth
2.1. β-Convergence in the Solow-Swan model
2.1.1. The theory of absolute and conditional β-convergence
2.1.2. The speed of convergence
3. Data
3.1. Gross Domestic Product
3.2. Savings Rate
3.3. Labor Force
3.4. Migration
4. Results
4.1. Absolute β-convergence
4.2. Conditional convergence
4.3. Migration and convergence
5. Conclusions
A. Appendix
A.1. Characteristics of panel data
A.2. Panel data models
A.2.1. The model with fixed effects
A.2.2. The model with random effects
A.3. Instrumental variables and Two-Stage Least Squares(TSLS)
A.4. Nonlinear regression models
Research Objectives and Topics
This study investigates the impact of migration—specifically total and foreign migration—on economic growth in Austria from 1961 to 2002, utilizing the Neoclassical Solow-Swan growth model as the analytical framework to test for absolute and conditional convergence.
- Analysis of economic growth determinants using the Solow-Swan framework.
- Empirical testing of absolute and conditional β-convergence across Austrian federal states.
- Evaluation of the relationship between total/foreign migration and GDP per capita growth.
- Application of econometric panel data methods and Two-Stage Least Squares (TSLS) for endogeneity testing.
- Construction of a comprehensive regional dataset for Austria covering 1961–2002.
Excerpt from the Book
1. Introduction
The focus of this study is to analyse the effect of migration on the growth of GDP per capita in Austria. At the beginning of 1960, Austrian politicans followed the example of West Germany or Switzerland and tried recruiting workers from abroad. Multilateral agreements with Spain, Turkey and Yugoslavia should have induced migration towards Austria to cover the domestic labor demand. Contingents defining the quantity where negotiated between industriy and politicians, to match the excess demand as exactly as possible. The first remarkable waves of immigration took place in the second half of the 60’s and reached their peak in 1973. Due to stagnation and increasing domestic labor supply, the contingents were reduced and remained at a low level until 1984.
Between 1984 and 1994, the number of foreign workers in Austria doubled. The last decade shows a slightly increasing percentage of alien employees. Within this time period not only the number of foreigners but also the dominating countries of origin changed. During the 60’s, the largest percentage was constituted by workers from Yugoslavia. The stagnation in Austria caused a reduction in this percentage, while the proportion of Turkish workers remained constant. After the collapse of the communist regimes, immigration from Eastern Europe become important. On the other hand, Austria was also affected by emmigration. These waves had already started in the second part of the 50’s. The most popular destination was Germany followed by Switzerland and North and South American countries.
Summary of Chapters
1. Introduction: This chapter outlines the motivation for the study, providing historical context on migration in Austria and defining the research scope and objectives.
2. The Solow-Swan model of economic growth: This section presents the theoretical framework of the Neoclassical growth model, detailing the steady-state conditions and the concepts of absolute and conditional β-convergence.
3. Data: This chapter describes the assembly of a 42-year panel dataset for Austria, covering variables such as GDP, savings rates, labor force, and migration.
4. Results: This chapter provides the empirical analysis, presenting estimations for absolute and conditional convergence and evaluating the role of migration in economic growth.
5. Conclusions: This section summarizes the main findings, noting the observed convergence trends and the significant, positive impact of migration on economic growth in Austria.
A. Appendix: This section details the econometric methodologies, including panel data characteristics, regression models, and instrumental variable approaches.
Keywords
Economic growth, Solow-Swan model, β-convergence, Migration, GDP per capita, Austria, Panel data, Neoclassical theory, Conditional convergence, Instrumental variables, TSLS, Labor economics, Regional economics, Capital stock, Savings rate.
Frequently Asked Questions
What is the core subject of this paper?
The paper examines whether migration, classified into total and foreign migration, influences economic growth in Austria within the framework of the Neoclassical Solow-Swan model.
What are the primary thematic fields covered?
The paper focuses on economic growth theory, regional economic convergence, and the empirical impact of international migration on domestic productivity.
What is the main research question?
The research objective is to determine if migration variables provide additional explanatory power for growth variations in Austrian federal states beyond standard Solow-Swan model inputs.
Which scientific methods are employed?
The study uses empirical panel data analysis, including absolute and conditional convergence tests, and applies Two-Stage Least Squares (TSLS) to address potential endogeneity.
What is covered in the main body of the work?
The main body covers the theoretical Solow-Swan model, data construction procedures for the Austrian regions, empirical regression results, and an evaluation of migration's significance.
Which keywords characterize the work?
Key terms include economic growth, Solow-Swan model, β-convergence, migration, GDP per capita, and panel data analysis.
How does migration affect the growth rate in the empirical results?
The empirical findings indicate a positive and highly significant relationship between total migration and the growth of GDP per capita in Austria.
Why was the Two-Stage Least Squares (TSLS) method used?
TSLS was employed to test whether migration might be endogenous—meaning it could be a function of growth—by using the initial number of foreign workers per capita as an instrument.
What conclusion does the author reach regarding migration and economic growth?
The author concludes that while migration correlates positively with growth, the hypothesis of endogeneity was rejected, indicating that migration cannot be explained simply by economic growth in this model.
- Quote paper
- Clemens Buchinger (Author), 2006, Growth, Convergence and Migration in Austria, Munich, GRIN Verlag, https://www.grin.com/document/288616
