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Immigration, Education and Labour Market Institutions

  • Christian Lumpe


    (Department of Economics, University of Konstanz)

  • Benjamin Weigert


    (Department of Economics, University of Konstanz)

In this paper we analyse the effect of immigration on the labour market conditions for different skill groups. We develop a model of endogenous labour supply in which immigration affects educational decisions. We show how the skill premium changes with immigration of low skilled labour under flexible and rigid wages. Depending on the labour market institutions, immigration of low skilled labour is absorbed either by an increased skill premium or increased unemployment of low skilled labour. Thus, we extend the existing explanations of changing skill premia and unemployment of low skilled labour experienced during the last decades. Our model gives a rationale for the debate on immigration of high skilled workers as a way to reduce unemployment of low skilled workers in highly rigid labour markets.

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Paper provided by Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim in its series Working Papers of the Research Group Heterogenous Labor with number 04-14.

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Length: 35 pages
Date of creation: 26 Aug 2004
Date of revision:
Handle: RePEc:knz:hetero:0414
Contact details of provider: Postal: D-78457 Konstanz
Phone: +49 7531 88 2314
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  1. Entorf, Horst, 2000. "Rational migration policy should tolerate non-zero illegal migration flows: Lessons from modelling the market for illegal migration," W.E.P. - Würzburg Economic Papers 23, University of Würzburg, Chair for Monetary Policy and International Economics.
  2. Jürgen Meckel & Benjamin Weigert, 2032. "Globalization, Technical Change, and the Skill Premium : Magnification Effects from Human-Capital Investments," Working Papers of the Research Group Heterogenous Labor 03-04, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.
  3. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 57-80, Summer.
  4. Paul R. Krugman, 1994. "Past and prospective causes of high unemployment," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 23-43.
  5. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  6. Wood Júnior, Thomaz, 1995. "Workers," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 35(2), January.
  7. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  8. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier.
  9. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
  10. Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
  11. Wood, Adrian, 1998. "Globalisation and the Rise in Labour Market Inequalities," Economic Journal, Royal Economic Society, vol. 108(450), pages 1463-82, September.
  12. Clemens Fuest & Marcel Thum, 1999. "Immigration and Skill Formation in Unionised Labour Markets," CESifo Working Paper Series 214, CESifo Group Munich.
  13. repec:tpr:qjecon:v:118:y:2003:i:4:p:1335-1374 is not listed on IDEAS
  14. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
  15. George J. Borjas, 1995. "The Economic Benefits from Immigration," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 3-22, Spring.
  16. Schmidt, Christoph M. & Stilz, Anette & Zimmermann, Klaus F., 1994. "Mass migration, unions, and government intervention," Journal of Public Economics, Elsevier, vol. 55(2), pages 185-201, October.
  17. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
  18. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, December.
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