Welfare effects of illegal immigration
This paper analyzes the welfare effect of illegal immigration on the host country within a dynamic general equilibrium framework and shows that it is positive for two reasons. First, immigrants are paid less than their marginal product and second, following an increase in immigration, domestic households find it optimal to increase their holdings of capital. It is also shown that dynamic inefficiency may arise, despite the fact that the model is of the Ramsey type. Nevertheless, the introduction of a minimum wage, which leads to job competition between domestic unskilled workers and immigrants reverses all of the above results.
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Volume (Year): 22 (2009)
Issue (Month): 1 (January)
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References listed on IDEAS
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- Ethier, Wilfred J, 1986. "Illegal Immigration," American Economic Review, American Economic Association, vol. 76(2), pages 258-62, May.
- Hazari, Bharat R. & Sgro, Pasquale M., 2003.
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2830, Institute for the Study of Labor (IZA).
- Ortega, Javier, 2000. "Pareto-Improving Immigration in an Economy with Equilibrium Unemployment," Economic Journal, Royal Economic Society, vol. 110(460), pages 92-112, January.
- Alexander Kemnitz & Berthold U. Wigger, 2000.
"Growth and Social Security: The Role of Human Capital,"
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33, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Kemnitz, Alexander & Wigger, Berthold U., 2000. "Growth and social security: the role of human capital," European Journal of Political Economy, Elsevier, vol. 16(4), pages 673-683, November.
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