Immigration and the Dutch disease. A counterfactual analysis of the Norwegian resource boom 2004-2013

Abstract

The EU-enlargement in 2004 increased labour migration and affected the Norwegian labour market in particular. We study how this modified the Dutch disease effects during the resource boom 2004- 2013.

In the Norwegian case the resource movement effect of the petroleum industry has historically dominated the spending effect. One reason is the introduction of the fiscal policy rule in 2001 that limited spending. We find that economic growth in Norway was roughly doubled during this period due to the resource boom while total population increased by 2 per cent. We find that both the resource movement and spending effects on Mainland GDP have been reduced by roughly 2 percentage points due to immigration while the unemployment rate was not much affected.