Illegal Immigration, Factor Substitution and Economic Growth
This paper develops a growth model with illegal immigration in which there exist two types of domestic labor, skilled and unskilled. These two types enter the production via a CES aggregator. In a similar manner, the paper also allows for the possibility of imperfect substitution between native and immigrant labor. Within such a framework it analyzes the e ects of an increase in immigration on the average capital stock, individual wages, asset holdings and the distribution of wealth. Contrary to previous results in the literature, the paper shows that illegal immigration may not necessarily make the distribution of wealth more unequal and unskilled labor worse o . This is so because the end results depend on the elasticities of substitution between di erent types of labor. Thus, assuming erroneously that immigrants and natives are perfect substitutes could lead to results that are not only over-estimated but also of the wrong sign.
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- Palivos, Theodore & Karagiannis, Giannis, 2010.
"The Elasticity Of Substitution As An Engine Of Growth,"
Cambridge University Press, vol. 14(05), pages 617-628, November.
- Theodore Palivos & Giannis Karagiannis, 2007. "The elasticity of substitution as an engine of growth," Discussion Paper Series 2007_03, Department of Economics, University of Macedonia, revised Dec 2007.
- Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
- Liu, Xiangbo, 2010. "On the macroeconomic and welfare effects of illegal immigration," Journal of Economic Dynamics and Control, Elsevier, vol. 34(12), pages 2547-2567, December.
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