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Immigration, Education and Labour Market Institutions

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Author Info
Christian Lumpe () (Department of Economics, University of Konstanz)
Benjamin Weigert () (Department of Economics, University of Konstanz)

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Abstract

In this paper we analyse the effect of immigration on the labour market conditions for different skill groups. We develop a model of endogenous labour supply in which immigration affects educational decisions. We show how the skill premium changes with immigration of low skilled labour under flexible and rigid wages. Depending on the labour market institutions, immigration of low skilled labour is absorbed either by an increased skill premium or increased unemployment of low skilled labour. Thus, we extend the existing explanations of changing skill premia and unemployment of low skilled labour experienced during the last decades. Our model gives a rationale for the debate on immigration of high skilled workers as a way to reduce unemployment of low skilled workers in highly rigid labour markets.

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Publisher Info
Paper provided by Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim in its series Working Papers of the Research Group Heterogenous Labor with number 04-14.

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Length: 35 pages
Date of creation: 26 Aug 2004
Date of revision:
Handle: RePEc:knz:hetero:0414

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Postal: D-78457 Konstanz
Phone: +49 7531 88 2314
Web page: http://www.uni-konstanz.de/forschergruppewiwi
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Related research
Keywords: Immigration ; Skill premium ; Labour supply;

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Find related papers by JEL classification:
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

References listed on IDEAS
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  1. Paul Krugman, 1994. "Past and prospective causes of high unemployment," Proceedings, Federal Reserve Bank of Kansas City, issue Jan, pages 49-98.
    Other versions:
  2. Schmidt, Christoph M. & Stilz, Anette & Zimmermann, Klaus F., 1994. "Mass migration, unions, and government intervention," Journal of Public Economics, Elsevier, vol. 55(2), pages 185-201, October. [Downloadable!] (restricted)
  3. Zimmermann, Klaus F, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring. [Downloadable!] (restricted)
  4. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier. [Downloadable!] (restricted)
  5. Borjas, George J, 1995. "The Economic Benefits from Immigration," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 3-22, Spring. [Downloadable!] (restricted)
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  6. Jürgen Meckl & Benjamin Weigert, 2003. "Globalization, technical change and the skill premium: magnification effects from human-capital investments," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 12(4), pages 319-336, December. [Downloadable!] (restricted)
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  7. Siebert, Horst, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer. [Downloadable!] (restricted)
  8. Wood, Adrian, 1998. "Globalisation and the Rise in Labour Market Inequalities," Economic Journal, Royal Economic Society, vol. 108(450), pages 1463-82, September. [Downloadable!] (restricted)
  9. Fuest, Clemens & Thum, Marcel, 2001. "Immigration and skill formation in unionised labour markets," European Journal of Political Economy, Elsevier, vol. 17(3), pages 557-573, September. [Downloadable!] (restricted)
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  10. Entorf, Horst, 2000. "Rational Migration Policy Should Tolerate Non-Zero Illegal Migration Flows: Lessons from Modelling the Market for Illegal Migration," IZA Discussion Papers 199, Institute for the Study of Labor (IZA). [Downloadable!]
  11. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December. [Downloadable!] (restricted)
  12. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier. [Downloadable!] (restricted)
  13. Wood, Adrian, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 57-80, Summer. [Downloadable!] (restricted)
  14. 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. [Downloadable!] (restricted)
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