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Opening The Floodgates: Partial And General Equilibrium Adjustments To Labor Immigration

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  • Bernt Bratsberg
  • Andreas Moxnes
  • Oddbjørn Raaum
  • Karen Helene Ulltveit‐Moe

Abstract

We investigate the impact of a large immigration shock on occupational wages. We develop a general equilibrium model where individuals sort into occupations and confront testable hypotheses with data. To identify the effect of the labor supply shock, we introduce a novel instrument that exploits that immigrants systematically sort into different occupations than natives. We study the immigration wave to Norway after the Eastern enlargement and find that immigration led to lower relative occupational wages. A quantification of the general equilibrium shows welfare effects of immigration close to zero for natives, but negative effects for the pre‐existing population of immigrants.

Suggested Citation

  • Bernt Bratsberg & Andreas Moxnes & Oddbjørn Raaum & Karen Helene Ulltveit‐Moe, 2023. "Opening The Floodgates: Partial And General Equilibrium Adjustments To Labor Immigration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 3-21, February.
    • Handle: RePEc:wly:iecrev:v:64:y:2023:i:1:p:3-21
    DOI: 10.1111/iere.12595
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    References listed on IDEAS

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