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Immigration and native welfare

  • Felbermayr, Gabriel
  • Kohler, Wilhelm K.

This article unifies two approaches for identifying the welfare and wage effects of immigration, one emphasizing the immigration surplus, the other stressing a potential welfare loss due to a terms-of-trade effect. We decompose the native welfare effect into a standard complementarity effect, augmented by a Stolper-Samuelson effect, and a terms-of-trade effect. We illustrate the welfare and wage effects of endogenous goods prices in a stylized-specific factors model. Finally, we calibrate this model to a generic OECD economy and provide simulation results. The key insight is that endogenous goods prices play a quantitatively important role, sometimes even overturning received results.

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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 20608.

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Date of creation: 2007
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Publication status: Published in International Economic Review 3 48(2007): pp. 731-760
Handle: RePEc:lmu:muenar:20608
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Web page: http://www.vwl.uni-muenchen.de

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  1. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
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  5. 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.
  6. Assaf Razin & Efraim Sadka, 1992. "International Migration and International Trade," NBER Working Papers 4230, National Bureau of Economic Research, Inc.
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  9. George J. Borjas, 1994. "The Economic Benefits from Immigration," NBER Working Papers 4955, National Bureau of Economic Research, Inc.
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  16. 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.
  17. Guillermina Jasso & Mark Rosensweig & James P. Smith, 2003. "The Earnings of US immigrants," Labor and Demography 0312007, EconWPA.
  18. David K. Backus & Patrick J. Kehoe & Finn E. Kydland, 1993. "International Business Cycles: Theory and Evidence," Working Papers 93-21, New York University, Leonard N. Stern School of Business, Department of Economics.
  19. Neary, J Peter, 1985. "International Factor Mobility, Minimum Wage Rates, and Factor-Price Equalization: A Synthesis," The Quarterly Journal of Economics, MIT Press, vol. 100(3), pages 551-70, August.
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  22. Sanoussi Bilal & Jean-Marie Grether & Jaime de Melo, 2003. "Attitudes Towards Immigration: a Trade-Theoretic Approach," Review of International Economics, Wiley Blackwell, vol. 11(2), pages 253-267, 05.
  23. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
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