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Immigration and international prices

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  • Zachariadis, Marios

Abstract

This paper considers the relation between immigration and prices in a number of countries across the world over the period from 1990 to 2006. Immigration is shown to have a negative impact on international relative prices. A 10% increase in the share of immigrant workers in total employment decreases the prices of final products by as much as 3%. Our results suggest that the tendency of this factor of production to relocate to relatively expensive high-wage countries exerts downward pressure on prices of tradeables and non-tradeables there relative to other locations. The effect of immigration on prices is more evident for goods consumed by immigrants as compared to goods produced by immigrants.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 87 (2012)
Issue (Month): 2 ()
Pages: 298-311

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Handle: RePEc:eee:inecon:v:87:y:2012:i:2:p:298-311

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Web page: http://www.elsevier.com/locate/inca/505552

Related research

Keywords: International factor mobility; International LOP deviations; Immigration; Price convergence;

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References

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  1. Robert Lipsey & Birgitta Swedenborg, 2010. "Product price differences across countries: determinants and effects," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 146(3), pages 415-435, September.
  2. Lach, Saul, 2005. "Immigration and Prices," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5083, C.E.P.R. Discussion Papers.
  3. Ina Simonovska, 2010. "Income differences and prices of tradables," Globalization and Monetary Policy Institute Working Paper 55, Federal Reserve Bank of Dallas.
  4. Samuel Bentolila & Juan J. Dolado & Juan F. Jimeno, 2008. "Does immigration affect the Phillips curve? Some evidence for Spain," Banco de Espa�a Working Papers 0814, Banco de Espa�a.
  5. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
  6. Andrew Atkeson & Ariel Burstein, 2007. "Pricing-to-market, trade costs, and international relative prices," Working Paper Series 2007-26, Federal Reserve Bank of San Francisco.
  7. Patricia Cortes, 2008. "The Effect of Low-Skilled Immigration on U.S. Prices: Evidence from CPI Data," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 116(3), pages 381-422, 06.
  8. Charles Engel & John H. Rogers, 2004. "European product market integration after the euro," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 19(39), pages 347-384, 07.
  9. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, American Economic Association, vol. 79(4), pages 700-712, September.
  10. Alan T. Sorensen, 2000. "Equilibrium Price Dispersion in Retail Markets for Prescription Drugs," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(4), pages 833-862, August.
  11. Mario J. Crucini & Chris I. Telmer & Marios Zachariadis, 2001. "Understanding European Real Exchange Rates," Vanderbilt University Department of Economics Working Papers 0120, Vanderbilt University Department of Economics.
  12. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  13. Philippe Andrade & Marios Zachariadis, 2010. "Trends in International Prices," University of Cyprus Working Papers in Economics, University of Cyprus Department of Economics 02-2010, University of Cyprus Department of Economics.
  14. Mark Aguiar & Erik Hurst, 2005. "Lifecycle Prices and Production," NBER Working Papers 11601, National Bureau of Economic Research, Inc.
  15. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
  16. Tommaso Frattini, 2012. "Immigrazione," Rivista di Politica Economica, SIPI Spa, SIPI Spa, issue 3, pages 363-407, July-Sept.
  17. Zachariadis, Marios, 2011. "Immigration and international prices: An initial assessment," Economics Letters, Elsevier, vol. 110(2), pages 83-85, February.
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Cited by:
  1. Karin Mayr, 2012. "Occupation-specific immigration quotas in political equilibrium," Vienna Economics Papers, University of Vienna, Department of Economics 1207, University of Vienna, Department of Economics.

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