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A Capital Mistake? The Neglected Effect of Immigration on Average Wages

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  • Declan Trott

Abstract

Much recent literature on the wage effects of immigration assumes that the return to capital, and therefore the average wage, is unaffected in the long run. If immigration is modelled as a continuous flow rather than a one off shock, this result does not necessarily hold. A simple calibration with pre-crisis US immigration rates gives a reduction in average wages of 5%, larger than most estimates of its effect on relative wages.

Suggested Citation

  • Declan Trott, 2011. "A Capital Mistake? The Neglected Effect of Immigration on Average Wages," ANU Working Papers in Economics and Econometrics 2011-544, Australian National University, College of Business and Economics, School of Economics.
    • Handle: RePEc:acb:cbeeco:2011-544
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    File URL: https://www.cbe.anu.edu.au/researchpapers/econ/wp544.pdf
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    1. Gianmarco I. P. Ottaviano & Giovanni Peri, 2021. "Rethinking The Effect Of Immigration On Wages," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 9, pages 245-290, World Scientific Publishing Co. Pte. Ltd..
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    7. Ottaviano, Gianmarco & Peri, Giovanni, 2008. "Immigration and National Wages: Clarifying the Theory and the Empirics," CEPR Discussion Papers 6916, C.E.P.R. Discussion Papers.
    8. Gianmarco I. P. Ottaviano & Giovanni Peri, 2016. "Rethinking The Effect Of Immigration On Wages," World Scientific Book Chapters,in: The Economics of International Migration, chapter 2, pages 35-80 World Scientific Publishing Co. Pte. Ltd..
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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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