Immigration and long-run economic outcomes: a note

The paper sets out a simple growth model that assumes imperfect substitutability between immigrants and native workers and posits technological progress as a necessary by-product of the migration process. The paper explores a much-neglected topic of the long-run impact of immigration on a growing economy. The paper shows that, while the short-run impact of immigration on economic outcomes such as capital-per worker, output-per worker and real wages can be negative, the long-run impact of immigration on these variables is not necessarily always adverse. Much depends on the balance between the labor-augmentation effect and the innovation effect of immigration, influences which often work in opposite directions. The paper demonstrates the crucial role of the parameter values of the innovation elasticity in determining the long-run impact of immigration on wages, capital-labor ratio and per capita income.