Understanding the macroeconomic impact of migration in Malta

Abstract

This paper tries to evaluate the macroeconomic impact of increased economic migration to Malta. Administrative data show that the proportion of foreign workers has risen from 1.3% of the total workforce in 2000 to 10.1% in 2014. In the absence of immigration, the working age population would have shrunk slightly, instead of rising by 3% since EU accession. While the bulk of these migrants are in managerial, professional and technical occupations, there are a growing number of foreign workers in elementary occupations and in clerical and support duties. Dependence on migrant workers is quite concentrated, with half of the entire workforce in entertainment & recreation, professional services & administrative support and in hotels & restaurants. While evidence of the impact of the influx of foreign workers on wages is mixed, this note suggests that their economic contribution has been significant. In the period 2010 to 2014, they contributed annually to 0.6 percentage points of potential output growth, while their share in total personal income tax and national insurance contributions rose by 3.4 percentage points.