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How (Good) Immigration is: a matching analysis

Author

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  • Ortega, Javier

    (Departement d'Economia, Universitat Pompeu Fabra)

Abstract

We present a dynamic two-country labour matching economy. Workers decide whether to search in their native country (paying a small cost) or to look for a job abroad (bearing an additional cost). Firms choose the number of vacancies they post in each country according to the average workers' characteristics inside it. Wages are determined in an individual Nash bargaining. We show the existence of multiple steady-state equilibria : a no-migration equilibrium and two migration equilibria. The multiplicity of equilibria comes from a self-fulfilling prophecy phenomenon linking average wages and incentives to migration. The equilibria are Pareto-ranked, with migration-equilibria dominating no-migration.

Suggested Citation

  • Ortega, Javier, 1997. "How (Good) Immigration is: a matching analysis," Seminar Papers 618, Stockholm University, Institute for International Economic Studies.
  • Handle: RePEc:hhs:iiessp:0618
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    Keywords

    immmigration; migration; labour; Nash bargaining; multiple steady-state equilibria; Pareto efficiency;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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