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How (Good) Immigration is: a matching analysis

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  • Ortega, Javier

    (Departement d'Economia, Universitat Pompeu Fabra)

Abstract

We present a dynamic two-country labour matching economy. Workers decide whether to search in their native country (paying a small cost) or to look for a job abroad (bearing an additional cost). Firms choose the number of vacancies they post in each country according to the average workers' characteristics inside it. Wages are determined in an individual Nash bargaining. We show the existence of multiple steady-state equilibria : a no-migration equilibrium and two migration equilibria. The multiplicity of equilibria comes from a self-fulfilling prophecy phenomenon linking average wages and incentives to migration. The equilibria are Pareto-ranked, with migration-equilibria dominating no-migration.

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Bibliographic Info

Paper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 618.

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Length: 30 pages
Date of creation: 30 Oct 1997
Date of revision:
Publication status: Published in Economic Journal, 2000, pages 1-21.
Handle: RePEc:hhs:iiessp:0618

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Keywords: immmigration; migration; labour; Nash bargaining; multiple steady-state equilibria; Pareto efficiency;

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