Immigration and Economic Growth:
Evidence from Chile

by Alessandra Anna Palazzo

Migration is one of the most important social and economic challenges of our time. Around the  world, millions of people leave their homes in search of safety, stability, and opportunities to build  a better future. How host countries respond to these movements of people has important  consequences not only for migrants themselves, but also for the societies and economies that  receive them. 

My research studies the experience of Chile, a country that received one of the largest migration  waves in Latin America during the last decade. Between 2015 and 2019, nearly one million  immigrants arrived in Chile, many fleeing the humanitarian and economic crises in Venezuela and  Haiti. In just a few years, immigration transformed the country’s labor market and changed the  composition of the workforce in many firms.

Public debates about immigration often focus on whether migrants take jobs from native workers  or affect wages. My research asks a different question: how does immigration influence the way  firms invest and grow? 

To answer this question, I use detailed administrative data that links workers and firms across  Chile. This allows me to study how firms changed their investment decisions as they hired more  immigrant workers and as the composition of their workforce evolved.

The findings suggest that immigration can be an important source of economic growth. Firms that  gained access to more skilled immigrant workers increased their investment in machinery,  equipment, and other productive assets. In other words, immigration did not simply provide  additional labor. It encouraged firms to expand, modernize, and invest in their future.

A key lesson from the study is that skills matter, but so does integration. Immigrants bring  knowledge, experiences, and perspectives acquired in different countries and institutions. When  firms are able to combine these talents with those of native workers, they can become more  productive and innovative. The benefits emerge not because immigrants replace native workers,  but because people with different backgrounds are able to contribute and work together. 

This insight is particularly relevant today. Around the world, many migrants face barriers that  prevent them from fully participating in economic life. Professional qualifications may not be  recognized, language barriers can limit opportunities, and workers are often employed in jobs that  do not reflect their skills and experience. When this happens, societies fail to benefit from the  talents that migrants bring with them. 

The Chilean experience shows that welcoming immigrants and supporting their integration can  generate benefits that extend beyond the individuals directly involved. When migrants are able to  use their skills, firms invest more, productive capacity grows, and new opportunities are created.  Economic development and social inclusion can therefore reinforce one another. 

This message resonates with the vision of the Economy of Francesco, which calls for an economy  centered on people, participation, and the common good. Migration is often discussed as a 

challenge to be managed, but it can also be understood as an opportunity to build more inclusive  and dynamic societies. The evidence from Chile suggests that when people are given the chance  to contribute according to their talents, everyone benefits. 

Ultimately, this research highlights a simple but important idea: immigrants are not only workers  entering a labor market. They are individuals with skills, aspirations, and the capacity to contribute  to the communities that receive them. Creating the conditions for their successful integration is not  only a matter of social justice, it is also an investment in a more productive, innovative, and  inclusive economy.

Alessandra Anna Palazzo

2025-2026 EoF Academy Fellow