Immigration and Production Technology
AbstractResearch on the labor market impact of immigration typically relies on a single-good model of production with separable capital. This article discusses theory and evidence that suggest that this standard model is too simple to capture the labor market impact of immigration. A reasonable level of capital-skill complementarity, for which there is considerable support outside research on immigration, alone reduces the relative wage impact of immigration by 40 percent compared to simulations with skill-neutral capital. Other models in which the production structure responds to skill mix changes, including models with endogenous choice of technique, directed technical change, or human capital spillovers, can also imply the impact of immigration is considerably different than in the standard model. This article discusses new research which tries to credibly evaluate such models using immigration-induced variation in skill mix, an approach with further potential, and evidence that immigration impacts innovation and firm formation.
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Date of creation: Aug 2012
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Find related papers by JEL classification:
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-08-23 (All new papers)
- NEP-LMA-2012-08-23 (Labor Markets - Supply, Demand, & Wages)
- NEP-MIG-2012-08-23 (Economics of Human Migration)
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- Nathan, Max, 2013.
"The Wider Economic Impacts of High-Skilled Migrants: A Survey of the Literature,"
IZA Discussion Papers
7653, Institute for the Study of Labor (IZA).
- Dr Max Nathan, 2013. "The Wider Economic Impacts Of High-Skilled Migrants: A Survey Of The Literature," NIESR Discussion Papers 11607, National Institute of Economic and Social Research.
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