Samuel Bentolila, Juan Dolado, Juan F Jimeno, 12 January 2008

Spain’s inflation-less drop in unemployment is due in large part to its immigration boom. If immigrants’ labour-supply behaviour comes closer to that of natives and inflation remains above target, a deeper slowdown or increasing immigration flows will be needed to bring it down.

Samuel Bentolila, Juan Dolado, Juan F Jimeno, 18 December 2007

Over the period 1995-2006, Spanish unemployment decreased by almost 12 percentage points, from 22% to 8%, while inflation remained roughly constant at around 3 - 4%, resulting in a flatter Phillips curve than in any other euro area country. The authors of CEPR DP6604 argue that this favourable evolution is largely due to the impact of the huge rise in the immigration rate, from 1% of the population in 1995 to 9.3% in 2006, on the labour market.

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