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The Immigration Surplus Revisited in a General Equilibrium Model with Endogenous Growth

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Author Info

  • Paul Levine

    (University of Surrey)

  • Emanuela Lotti

    (University of Surrey)

  • Joseph Pearlman

    (London Guildhall University)

Abstract

We revisit the work of Borjas (1995) which has provided an influential positive theory of immigration policy. An important feature of his framework is the focus on the skill-composition of immigrants and we retain this feature in our paper. Our contribution to this literature is to extend his analysis in a number of directions. First, we study the immigration surplus in the context of a general equilibrium model in which capital is endogenous and the welfare of the indigenous population is set out explicitly. Second, we introduce several sectors into the model so that changing the skill composition leads to changes in sector shares. Third, related to the second development, we introduce and R&D sector and develop a model with long-term endogenous growth. The result is that growth effects on the Immigration Surplus come to dominate the purely static effects in the original analysis of Borjas, but they are not sufficient to eliminate the emergence of losers among the section of natives competing with immigrants in the labour market.

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Bibliographic Info

Paper provided by School of Economics, University of Surrey in its series School of Economics Discussion Papers with number 0203.

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Length: 47 pages
Date of creation: Jan 2003
Date of revision:
Handle: RePEc:sur:surrec:0203

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Postal: Guildford, Surrey GU2 5XH
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Fax: (01483) 259548
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Web page: http://www.surrey.ac.uk/economics/
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Keywords: immigration surplus; economic growth; income distribution;

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References

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  1. Fabio Canova & Eva Ortega, 1996. "Testing calibrated general equilibrium models," Economics Working Papers 166, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Reinhart, Carmen & Ogaki, Masao, 1995. "Measuring intertemporal substitution: The role of durable goods," MPRA Paper 13690, University Library of Munich, Germany.
  3. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
  4. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  5. Lundborg, Per & Segerstrom, Paul S, 2000. "International Migration and Growth in Developed Countries: A Theoretical Analysis," Economica, London School of Economics and Political Science, vol. 67(268), pages 579-604, November.
  6. Lundborg, Per & Segerstrom, Paul S., 1998. "The Growth and Welfare Effects of International Mass Migration," Working Paper Series 146, Trade Union Institute for Economic Research.
  7. Li, Chol-Won, 2000. "Endogenous vs. Semi-endogenous Growth in a Two-R&D-Sector Model," Economic Journal, Royal Economic Society, vol. 110(462), pages C109-22, March.
  8. Canova, Fabio, 1994. "Statistical Inference in Calibrated Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(S), pages S123-44, Suppl. De.
  9. George J. Borjas, 1995. "The Economic Benefits from Immigration," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 3-22, Spring.
  10. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521319867, April.
  11. Lucas Bretschger, 2001. "Labor Supply, Migration, and Long-Term Development," Open Economies Review, Springer, vol. 12(1), pages 5-27, January.
  12. Canova, Fabio & Ravn, Morten O., 1998. "The Macroeconomic Effects of German Unification: Real Adjustments and the Welfare State," CEPR Discussion Papers 2038, C.E.P.R. Discussion Papers.
  13. Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, December.
  14. Michael C. Burda & Jennifer Hunt, 2001. "From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 1-92.
  15. Chui, Michael & Levine, Paul & Pearlman, Joseph, 2001. "Winners and losers in a North-South model of growth, innovation and product cycles," Journal of Development Economics, Elsevier, vol. 65(2), pages 333-365, August.
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Cited by:
  1. Paul Levine & Emanuela Lotti & Joseph Pearlman & Richard Pierse, 2010. "Growth And Welfare Effects Of World Migration," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(5), pages 615-643, November.
  2. Sari Pekkala Kerr & William R. Kerr, 2011. "Economic Impacts of Immigration: A Survey," NBER Working Papers 16736, National Bureau of Economic Research, Inc.
  3. Wido Geis, 2009. "Does Educational Choice Erode the Immigration Surplus?," Ifo Working Paper Series Ifo Working Paper Nr. 80, Ifo Institute for Economic Research at the University of Munich.
  4. DE LA CROIX, David & DOCQUIER, Frédéric, 2009. "An incentive mechanism to break the low-skill immigration deadlock," CORE Discussion Papers 2009053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Xavier Chojnicki & Frédéric Docquier & Lionel Ragot, 2011. "Should the US have locked heaven’s door?," Journal of Population Economics, Springer, vol. 24(1), pages 317-359, January.
  6. Stephen Drinkwater & Paul Levine & Emanuela Lotti & Joseph Pearlman, 2003. "The Economic Impact of Migration: A Survey," School of Economics Discussion Papers 0103, School of Economics, University of Surrey.
  7. Erik Hornung, 2011. "Immigration and the Diffusion of Technology: The Huguenot Diaspora in Prussia," Ifo Working Paper Series Ifo Working Paper No. 114, Ifo Institute for Economic Research at the University of Munich.
  8. Cat Moody, 2006. "Migration and Economic Growth: a 21st Century Perspective," Treasury Working Paper Series 06/02, New Zealand Treasury.
  9. Jacques Poot, 2007. "Demographic Change and Regional Competitiveness: The Effects of Immigration and Ageing," Population Studies Centre Discussion Papers dp-64, University of Waikato, Population Studies Centre.
  10. Clark, Ken & Drinkwater, Stephen, 2013. "UK Migration Policy and Migration from Eastern Partnership Countries," IZA Discussion Papers 7665, Institute for the Study of Labor (IZA).
  11. Erik Hornung, 2012. "Human Capital, Technology Diffusion, and Economic Growth - Evidence from Prussian Census Data," ifo Beiträge zur Wirtschaftsforschung, Ifo Institute for Economic Research at the University of Munich, number 46, July.

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