Optimal quota for sector-specific immigration
AbstractSectoral labor supply shortage is a cause of concern in many OECD countries and has raised support for immigration as a potential remedy. In this paper, we derive a general equilibrium model with overlapping generations, where natives require a compensating wage differential for working in one sector rather than in another. We identify price and wage effects of immigration on three different groups of natives: the young working in one of two sectors and the old. We determine the outcome of a majority vote on immigration into a given sector as well as the social optimum. The main findings are that i) the old determine the majority voting outcome of positive immigration into both sectors, if natives are not mobile across sectors, ii) the young determine the majority voting outcome of zero immigration into both sectors, if natives are mobile across sectors, iii) the social optimum is smaller than or equal to the majority voting outcome, and iv) sector-specific immigration is not always a substitute for native mobility across sectors.
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Bibliographic InfoPaper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2008-07.
Date of creation: May 2008
Date of revision:
immigration; political economy; welfare; sectoral mobility;
Other versions of this item:
- Karin Mayr, 2008. "Optimal quota for sector-specific immigration," The Institute for International Integration Studies Discussion Paper Series iiisdp254, IIIS.
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-13 (All new papers)
- NEP-DGE-2008-06-13 (Dynamic General Equilibrium)
- NEP-LAB-2008-06-13 (Labour Economics)
- NEP-MIG-2008-06-13 (Economics of Human Migration)
- NEP-POL-2008-06-13 (Positive Political Economics)
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