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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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Web page: http://www.uni-konstanz.de/forschergruppewiwi

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  1. Jurgen Meckl & Benjamin Weigert, 2003. "Globalization, technical change and the skill premium: magnification effects from human - capital investments," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(4), pages 319-336.
  2. Paul Krugman, 1994. "Past and prospective causes of high unemployment," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Jan, pages 49-98.
  3. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  4. George J. Borjas, 2003. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1335-1374, November.
  5. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
  6. Fuest, Clemens & Thum, Marcel, 2001. "Immigration and skill formation in unionised labour markets," European Journal of Political Economy, Elsevier, vol. 17(3), pages 557-573, September.
  7. 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.
  8. Wood, Adrian, 1998. "Globalisation and the Rise in Labour Market Inequalities," Economic Journal, Royal Economic Society, vol. 108(450), pages 1463-82, September.
  9. George J. Borjas, 1994. "The Economic Benefits from Immigration," NBER Working Papers 4955, National Bureau of Economic Research, Inc.
  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. 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.
  12. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1.
  13. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 57-80, Summer.
  14. 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.
  15. Entorf, Horst, 2000. "Rational Migration Policy Should Tolerate Non-Zero Illegal Migration Flows: Lessons from Modelling the Market for Illegal Migration," IZA Discussion Papers 199, Institute for the Study of Labor (IZA).
  16. 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.
  17. 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.
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