Immigration and Outsourcing: A General Equilibrium Analysis
AbstractThis paper analyzes the issues of immigration and outsourcing in a general-equilibrium model of international factor mobility. In our model, legal immigration is controlled through a quota, while outsourcing is determined both by the firms (in response to market conditions) and through policy-imposed barriers. A loosening of the immigration quota reduces outsourcing, enriches capitalists, leads to losses for native workers, and raises national income. If the nation targets an exogenously determined immigration level, the second-best outsourcing tax can be either positive or negative. If in addition to the immigration target there is a wage target (arising out of income distribution concerns), an outsourcing subsidy is required. The analysis is extended to consider illegal immigration and enforcement policy. A higher legal immigration quota will lead to more illegal immigration if skilled and unskilled labor are complements in production. If the two kinds of labor are complements (substitutes), nationational income increases (decreases) monotonically with the level of legal immigration.
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Bibliographic InfoPaper provided by Department of Economics, West Virginia University in its series Working Papers with number 05-08 Classification-.
Length: 23 pages
Date of creation: 2005
Date of revision:
Other versions of this item:
- Subhayu Bandyopadhyay & Howard J. Wall, 2010. "Immigration and Outsourcing: A General-Equilibrium Analysis," Review of Development Economics, Wiley Blackwell, vol. 14(s1), pages 433-446, 08.
- Subhayu Bandyopadhyay & Howard J. Wall, 2007. "Immigration and outsourcing: a general equilibrium analysis," Working Papers 2005-058, Federal Reserve Bank of St. Louis.
- Subhayu Bandoyopadhyay & Howard J. Wall, 2006. "Immigration and Outsourcing: A General Equilibrium Analysis," Working Papers 06-15 Classification-, Department of Economics, West Virginia University.
- Bandyopadhyay, Subhayu & Wall, Howard J., 2005. "Immigration and Outsourcing: A General Equilibrium Analysis," IZA Discussion Papers 1694, Institute for the Study of Labor (IZA).
- F1 - International Economics - - Trade
- F2 - International Economics - - International Factor Movements and International Business
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- J1 - Labor and Demographic Economics - - Demographic Economics
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-16 (All new papers)
- NEP-DEV-2006-09-16 (Development)
- NEP-INT-2006-09-16 (International Trade)
- NEP-KNM-2006-09-16 (Knowledge Management & Knowledge Economy)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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