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On the macroeconomic and welfare effects of illegal immigration

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  • Liu, Xiangbo

Abstract

This paper uses a dynamic general equilibrium model with labor market frictions to explore the economic consequences of illegal immigration. In the baseline model, native workers and illegal foreign workers compete for jobs in the same market, but serve as imperfect substitutes in production. The calibrated model generates a U-shaped relationship between long-run domestic consumption and the population share of illegal immigrants. After taking into account both consumption and leisure, I found that an increase in illegal immigration can generate significant welfare gains for the natives. The baseline model is then extended to include heterogeneous workers in the domestic population.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 34 (2010)
Issue (Month): 12 (December)
Pages: 2547-2567

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Handle: RePEc:eee:dyncon:v:34:y:2010:i:12:p:2547-2567

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Web page: http://www.elsevier.com/locate/jedc

Related research

Keywords: Search Unemployment Illegal immigration Economic growth;

References

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  1. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1997. "Computing Inequality: Have Computers Changed the Labor Market?," NBER Working Papers 5956, National Bureau of Economic Research, Inc.
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  16. George J. Borjas & Jeffrey Grogger & Gordon H. Hanson, 2006. "Immigration and African-American Employment Opportunities: The Response of Wages, Employment, and Incarceration to Labor Supply Shocks," NBER Working Papers 12518, National Bureau of Economic Research, Inc.
  17. Djajic, Slobodan, 1997. "Illegal Immigration and Resource Allocation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 97-117, February.
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Citations

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Cited by:
  1. Andri Chassamboulli & Theodore Palivos, 2014. "A Search‐Equilibrium Approach To The Effects Of Immigration On Labor Market Outcomes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 111-129, 02.
  2. Chassamboulli, Andri & Palivos, Theodore, 2010. ""Give me your Tired, your Poor," so I can Prosper: Immigration in Search Equilibrium," MPRA Paper 32379, University Library of Munich, Germany.
  3. Theodore Palivos & Jianpo Xue & Chong K. Yip, 2011. "Illegal Immigration, Factor Substitution and Economic Growth," Discussion Paper Series 2011_10, Department of Economics, University of Macedonia, revised Jun 2011.
  4. Andri Chassamboulli & Theodore Palivos, 2013. "The impact of immigration on the employment and wages of native workers," Working Papers 160, Bank of Greece.
  5. Parello, Carmelo Pierpaolo, 2012. "Indeterminacy in a dynamic small open economy with international migration," MPRA Paper 40013, University Library of Munich, Germany.
  6. Andri Chassamboulli & Giovanni Peri, 2014. "The Labor Market Effects of Reducing Undocumented Immigrants," NBER Working Papers 19932, National Bureau of Economic Research, Inc.
  7. Audra J. Bowlus & Masashi Miyairi & Chris Robinson, 2013. "Immigrant Job Search Assimilation in Canada," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20136, University of Western Ontario, CIBC Centre for Human Capital and Productivity.

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