The Economic Impact of Immigration on Host Countries: The Case of Saudi Arabia

Over the past 40 years, the impact of immigration on employment, wages and other economic indicators has been robust and continually increasing. The characteristics of immigrants determine the relationship between migration and unemployment. This paper assesses the impact immigration has on economic development and unemployment in Saudi Arabia by explaining the shape of the causal relationship between immigration and economic performance on a macroeconomic scale. The data used for Saudi Arabia contains annual observation in the period between 1990 and 2010. With an econometric analysis based on the Jarque-Bera test for normal distribution, Dickey-Fuller for unit root test, Johansen cointegration tests and a vector error correction model test, we reveal that there is no cointegration among the variables. The Granger causality test explains that when the level of immigration raises, GDP per capita also increases. It has also been shown that immigration has no substantial influence on unemployment levels and vice versa.