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Should Native Workers Welcome Foreign Workers in Upturns?

Author

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  • Malchow-Møller, Nikolaj

    (Department of Economics, Copenhagen Business School)

  • Rose Skaksen, Jan

    (Department of Economics, Copenhagen Business School)

Abstract

In this paper, we show that the welfare implications of immigration which takes place in upturns, and may be partly reversed in downturns, are very different from the implications of immigration usually found in static models. Abstracting from any gains to capital owners and native workers due to complementarities, we find that (especially temporary) immigration may still benefit native workers in a European type of labour market where minimum wages may bind in downturns. However, in the presence of hiring costs, these effects may be reversed. Thus, promoting temporary immigration schemes may lead to adverse consequences if they also increase the costs of hiring foreign labour.

Suggested Citation

  • Malchow-Møller, Nikolaj & Rose Skaksen, Jan, 2008. "Should Native Workers Welcome Foreign Workers in Upturns?," Working Papers 12-2008, Copenhagen Business School, Department of Economics.
    • Handle: RePEc:hhs:cbsnow:2008_012
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    Keywords

    na;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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