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The macroeconomic impact of foreign labour influx into the industrialized nation state and the complementary policies

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  • Yong-Yil Choi

Abstract

This paper makes a numerical assessment on the macroeconomic impact of foreign labor influx into the industrialized nation state allowing free trade in goods but imposing an immigration quota on labor, and then explores the complementary policies for the impact of foreign labor influx. One of the main findings is that immigration itself brings welfare gains only if prices are flexible, but a skill-biased intake policy can bring a much larger welfare gain. The complementary policy options to boost welfare gains by immigration increase are monetary expansion, adopting foreign components more, and influencing foreign demand for intermediate goods indirectly by inviting foreign direct investment. For these policies to cope, the destination country should try to correct the market structure so that prices can be flexible.

Suggested Citation

  • Yong-Yil Choi, 2004. "The macroeconomic impact of foreign labour influx into the industrialized nation state and the complementary policies," Applied Economics, Taylor & Francis Journals, vol. 36(10), pages 1057-1063.
  • Handle: RePEc:taf:applec:v:36:y:2004:i:10:p:1057-1063
    DOI: 10.1080/0003684042000246777
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    1. Richard E. Baldwin & Paul Krugman, 1986. "Market Access and International Competition: A Simulation Study of 16K Random Access Memories," NBER Working Papers 1936, National Bureau of Economic Research, Inc.
    2. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 1992. "On the Labor Market Effects of Immigration and Trade," NBER Chapters,in: Immigration and the Workforce: Economic Consequences for the United States and Source Areas, pages 213-244 National Bureau of Economic Research, Inc.
    3. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
    4. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    5. William R. Cline, 1997. "Trade and Income Distribution," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 58.
    6. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, January.
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    Cited by:

    1. Phillips, Kerk L., 2010. "The Dynamic Effects of Changes to Japanese Immigration Policy," MPRA Paper 23673, University Library of Munich, Germany.
    2. Phillips, Kerk L., 2010. "A Dynamic General Equilibrium Analysis of Japanese & Korean Immigration," MPRA Paper 23501, University Library of Munich, Germany.

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