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Immigration, Search and Redistribution: A Quantitative Assessment of Native Welfare

Author

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  • Michele Battisti
  • Gabriel Felbermayr
  • Giovanni Peri
  • Panu Poutvaara

Abstract

What are the welfare effects of immigration on low-skilled and high-skilled natives? To address this question, we develop a general equilibrium model featuring two skill types, search frictions, wage bargaining, and a welfare state that redistributes income through unemployment benefits and the provision of public goods. Our quantitative analysis suggests that, in all 20 countries studied, immigration attenuates the effects of search frictions. The resulting gains tend to outweigh the welfare costs of redistribution. Immigration has increased native welfare in almost all countries. In two-thirds of countries, both high- and low-skilled natives have benefited from the presence of immigrants, contrary to what models without search frictions or redistribution predict. Average total welfare gains from migration are 1.25% and 1.00% for high- and low-skilled natives, respectively.

Suggested Citation

  • Michele Battisti & Gabriel Felbermayr & Giovanni Peri & Panu Poutvaara, 2018. "Immigration, Search and Redistribution: A Quantitative Assessment of Native Welfare," Journal of the European Economic Association, European Economic Association, vol. 16(4), pages 1137-1188.
    • Handle: RePEc:oup:jeurec:v:16:y:2018:i:4:p:1137-1188.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvx035
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    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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