Dutch disease and the mitigation effect of migration: evidence from Canadian provinces

Michel Beine*, Serge Coulombe, Wessel N. Vermeulen

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

36 Citations (Scopus)

Abstract

This article evaluates whether immigration can mitigate the Dutch disease effects associated with booms in natural resource sectors. We derive predicted changes in the size of the non-tradable sector from a small general-equilibrium model à la Obstfeld-Rogoff. Using data for Canadian provinces, we find evidence that aggregate immigration mitigates the increase in the size of the non-tradable sector in booming regions. The mitigation effect is due mostly to interprovincial migration and temporary foreign workers. There is no evidence of such an effect for permanent international immigration. Interprovincial migration also results in a spreading effect of Dutch disease from booming to non-booming provinces.

Original languageEnglish
Pages (from-to)1574-1615
Number of pages42
JournalEconomic Journal
Volume125
Issue number589
DOIs
Publication statusPublished - 1 Dec 2015
Externally publishedYes

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