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A New Look at the Impact of Migration on the Wage Differential

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  • Chang, Hsiao-Chuan

Abstract

The impact of migrants on the host country’s wages has been an important issue for policy makers and has attracted much research attention. Since no consistent conclusion has been reached regarding this impact, the debate over immigration policy continues in many countries. This paper constructs a theoretical dynamic general equilibrium model by which the transitional and long-run effects of a migration shock on endogenous variables, including the wage differential, can be illuminated. Consistent results from different scenarios are obtained: first, the wage differential is boosted by permanent migrants in both the short and the long run; second, if migrants stay temporarily, the wage differential increases in the short run and the effect dies out in the long run; third, permanent migrants impel domestic workers to upgrade skills by demanding an increased amount of education.

Suggested Citation

  • Chang, Hsiao-Chuan, 2002. "A New Look at the Impact of Migration on the Wage Differential," Conference papers 330974, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:330974
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    References listed on IDEAS

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    1. Bloom, David E. & Mahal, Ajay S., 1997. "Does the AIDS epidemic threaten economic growth?," Journal of Econometrics, Elsevier, vol. 77(1), pages 105-124, March.
    2. Devaragan, Shantayanan & Lewis, Jeffrey D. & Robinson, Sherman, 1990. "Policy lessons from trade-focused, two-sector models," Journal of Policy Modeling, Elsevier, vol. 12(4), pages 625-657.
    3. Cuddington, John T, 1993. "Modeling the Macroeconomic Effects of AIDS, with an Application to Tanzania," The World Bank Economic Review, World Bank, vol. 7(2), pages 173-189, May.
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