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Immigration, Search, and Redistribution: A Quantitative Assessment of Native Welfare

Listed author(s):
  • Battisti, Michele

    ()

    (Ifo Institute for Economic Research)

  • Felbermayr, Gabriel

    ()

    (University of Munich)

  • Peri, Giovanni

    ()

    (University of California, Davis)

  • Poutvaara, Panu

    ()

    (University of Munich)

We study the effects of immigration on native welfare in a general equilibrium model featuring two skill types, search frictions, wage bargaining, and a redistributive welfare state. Our quantitative analysis suggests that, in all 20 countries studied, immigration attenuates the effects of search frictions. These gains tend to outweigh the welfare costs of redistribution. Immigration has increased native welfare in almost all countries. Both high-skilled and low-skilled natives benefit in two thirds of countries, contrary to what models without search frictions predict. Average total gains from immigration are 1.25% and 1.00% for high and low skilled natives, respectively.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 8574.

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Length: 45 pages
Date of creation: Oct 2014
Handle: RePEc:iza:izadps:dp8574
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