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Migration, unemployment, and skill downgrading : a specific-factors approach

  • Vallizadeh, Ehsan

    ()

    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Muysken, Joan
  • Ziesemer, Thomas

"This paper analyzes the impact of the skill composition of migration flows on the host country's labor market in a specific factors two-sector model with heterogeneous labor (low-, medium-, and highly-skilled) and price- and wage-setting behavior. The low- and medium-skilled labor markets are characterized by frictions due to wage bargaining. Moreover, we assume skill downgrading of unemployed medium-skilled workers into low-skilled labor supply. Endogenous benefits create an interdependency between the two bargaining processes. Particular attention is paid to medium-skilled migration, which enables us to contribute to the literature by replicating important stylized facts regarding medium skills, such as i) the interaction between immigration, low-skilled unemployment, and mediumskill downgrading, ii) the increase in low skill intensive service jobs. The model is calibrated using data for Germany. The key findings are: (i) a migration-induced supply shock of medium skilled workers decreases the low-skilled unemployment rate under endogenous benefits; (ii) migration of only medium skilled labor has a neutral impact on GDP per capita; (iii) immigration of medium skilled labor together with some high skilled labor has a positive effect on output per capita." (Author's abstract, IAB-Doku) ((en))

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Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 201313.

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Length: 41 pages
Date of creation: 10 Sep 2013
Date of revision:
Publication status: published in: The Scandinavian Journal of Economics, (2015), 41 p.
Handle: RePEc:iab:iabdpa:201313
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