Publication

This paper examines the evolution of the Phillips Curve (PC) in Spain and the effect of immigration on it. The authors argue that the favorable evolution of the PC in the recent past is largely due to the huge rise in the immigration rate. They find that while the fall in unemployment over the last 8 years comes along with an increase in inflation of 2.2 percentage points per year, the increase of the relative unemployment rate of immigrants vis-à-vis natives accounts for an offsetting 0.9 percentage points drop in the inflation rate per year.