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Social Increasing Returns and the Effects of Immigration on the Host Country Economy

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Abstract

In this paper we analyse the impact of both the number of immigrants and their human capital on the welfare of the host economy. We will show that in the presence of 'social increasing returns' in human and physical capital accumulation, arising from a labour market characterized by a costly search and by randomness of the matching technology, immigrants' skill level may influence the investments in human capital of natives as well as the investments in physical capital. We will find that the immigrants' human capital interacts with social increasing returns making them stronger or weaker according to the level of immigrants' human capital relative to that of natives. If immigrants have a higher level of human capital, increasing returns are accelerated, while if immigrants' human capital is lower, increasing returns are weakened if not reversed. The consequence of this behaviour is that in the first case immigration has a positive impact on native welfare and there is a positive interrelation between the skills of natives, the skills of immigrants and the firms' level of physical capital. In the second case immigration may have a negative impact on the welfare of natives, on the skills of native workers and on the physical capital of firms. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd 1999.

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  • Maria Carillo & Concetto Vinci, 1999. "Social Increasing Returns and the Effects of Immigration on the Host Country Economy," LABOUR, CEIS, vol. 13(3), pages 623-645, September.
  • Handle: RePEc:bla:labour:v:13:y:1999:i:3:p:623-645
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    Cited by:

    1. Aldieri, Luigi & Vinci, Concetto Paolo, 2015. "R&D Migration: a cross-national analysis," MPRA Paper 62541, University Library of Munich, Germany.
    2. Luigi Aldieri & Concetto Paolo Vinci, 2016. "Knowledge Migration: A Cross-National Analysis," De Economist, Springer, vol. 164(2), pages 109-123, June.
    3. Adriana Barone & Concetto Paolo Vinci, 2001. "The Working Environment And Social Increasing Returns," Working Papers 3_2001, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    4. Simona Monteleone, 2009. "Brain drain e crescita economica: Una rassegna critica sugli effetti prodotti," Working Papers 2_2009, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.

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