Many countries pursue an immigration policy that is targeted at attracting high skilled workers. Borjas (1995) has shown that assuming perfect labor markets immigration leads to a welfare gain for the native population, the so-called immigration surplus. Thus, as the labor market for high skilled workers exhibits few frictions, high skilled immigration should lead to a welfare gain. Nevertheless, this argumentation implicitly assumes that immigration has no influence on the qualification structure of natives. In this paper I show that if natives anticipate high skilled immigration, fewer natives acquire a high education level. In labor markets that are not frictionless this effect can be such strong that high skilled immigration leads to a welfare loss for natives. Moreover, if high skilled migration is expected but not realized, this expectation generates a welfare loss.
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Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number
Ifo Working Paper Nr. 80.
Find related papers by JEL classification: H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
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Gabriel J. Felbermayr & Wilhelm Kohler, 2007.
"Immigration And Native Welfare,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 731-760, 08.
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