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Immigration and international prices

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  • Zachariadis, Marios

Abstract

This paper considers the relation between immigration and prices in a number of countries across the world over the period from 1990 to 2006. Immigration is shown to have a negative impact on international relative prices. A 10% increase in the share of immigrant workers in total employment decreases the prices of final products by as much as 3%. Our results suggest that the tendency of this factor of production to relocate to relatively expensive high-wage countries exerts downward pressure on prices of tradeables and non-tradeables there relative to other locations. The effect of immigration on prices is more evident for goods consumed by immigrants as compared to goods produced by immigrants.

Suggested Citation

  • Zachariadis, Marios, 2012. "Immigration and international prices," Journal of International Economics, Elsevier, vol. 87(2), pages 298-311.
  • Handle: RePEc:eee:inecon:v:87:y:2012:i:2:p:298-311
    DOI: 10.1016/j.jinteco.2012.01.004
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    References listed on IDEAS

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    1. Andrew Atkeson & Ariel Burstein, 2008. "Pricing-to-Market, Trade Costs, and International Relative Prices," American Economic Review, American Economic Association, vol. 98(5), pages 1998-2031, December.
    2. Bentolila, Samuel & Dolado, Juan J. & Jimeno, Juan F., 2008. "Does immigration affect the Phillips curve? Some evidence for Spain," European Economic Review, Elsevier, vol. 52(8), pages 1398-1423, November.
    3. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    4. Zachariadis, Marios, 2011. "Immigration and international prices: An initial assessment," Economics Letters, Elsevier, vol. 110(2), pages 83-85, February.
    5. Philippe Andrade & Marios Zachariadis, 2010. "Trends in International Prices," University of Cyprus Working Papers in Economics 02-2010, University of Cyprus Department of Economics.
    6. Tommaso Frattini, 2012. "Immigrazione," Rivista di Politica Economica, SIPI Spa, issue 3, pages 363-407, July-Sept.
    7. Mario J. Crucini & Chris I. Telmer & Marios Zachariadis, 2005. "Understanding European Real Exchange Rates," American Economic Review, American Economic Association, vol. 95(3), pages 724-738, June.
    8. Robert Lipsey & Birgitta Swedenborg, 2010. "Product price differences across countries: determinants and effects," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(3), pages 415-435, September.
    9. Ina Simonovska, 2015. "Income Differences and Prices of Tradables: Insights from an Online Retailer," Review of Economic Studies, Oxford University Press, vol. 82(4), pages 1612-1656.
    10. Charles Engel & John H. Rogers, 2004. "European product market integration after the euro," Economic Policy, CEPR;CES;MSH, vol. 19(39), pages 347-384, July.
    11. Mark Aguiar & Erik Hurst, 2007. "Life-Cycle Prices and Production," American Economic Review, American Economic Association, vol. 97(5), pages 1533-1559, December.
    12. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    13. Saul Lach, 2007. "Immigration and Prices," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 548-587, August.
    14. Ina Simonovska, 2009. "Income Differences and Prices of Tradables," 2009 Meeting Papers 692, Society for Economic Dynamics.
    15. Patricia Cortes, 2008. "The Effect of Low-Skilled Immigration on U.S. Prices: Evidence from CPI Data," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 381-422, June.
    16. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Rosa Sanchis-Guarner, 2017. "Decomposing the Impact of Immigration on House Prices," SERC Discussion Papers 0223, Spatial Economics Research Centre, LSE.
    2. M. A. Anderson & M. H. Davies & S. L. S. Smith, 2016. "Ethnic Networks and Price Dispersion," Review of International Economics, Wiley Blackwell, vol. 24(3), pages 514-535, August.
    3. Binnur Balkan & Semih Tumen, 2016. "Immigration and prices: quasi-experimental evidence from Syrian refugees in Turkey," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(3), pages 657-686, July.
    4. Andrade, Philippe & Zachariadis, Marios, 2016. "Global versus local shocks in micro price dynamics," Journal of International Economics, Elsevier, vol. 98(C), pages 78-92.
    5. Inkoo Lee & Sang Soo Park & Marios Zachariadis, 2018. "Non-Linearities in International Prices," University of Cyprus Working Papers in Economics 06-2018, University of Cyprus Department of Economics.
    6. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    7. World Bank Group, 2015. "Malaysia Economic Monitor, December 2015," World Bank Other Operational Studies 23565, The World Bank.
    8. Karin Mayr, 2012. "Occupation-specific immigration quotas in political equilibrium," Vienna Economics Papers 1207, University of Vienna, Department of Economics.
    9. repec:eee:jmacro:v:52:y:2017:i:c:p:118-134 is not listed on IDEAS

    More about this item

    Keywords

    International factor mobility; International LOP deviations; Immigration; Price convergence;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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