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Migration, Unemployment, and Over-qualification: A Specific Factors-Model Approach

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  • Muysken, Joan
  • Vallizadeh, Ehsan
  • Ziesemer, Thomas

Abstract

This paper analyses the impact of the skill composition of migration flows on the host country's labour market in a specific-factors-two-sector model with heterogeneous labour (low, medium, and high skill) and price- and wage-setting behaviour. The low- and medium-skilled labour markets are characterized by frictions due to wage bargaining. Moreover, we assume bumping down of unemployed medium-skilled workers into low-skilled labour supply. Endogenous benefits create an interdependency between the two bargaining processes. Particular attention is paid to medium-skilled migration which enables us to augment the literature by replicating important stylized facts regarding medium skills, such as i) the interaction between immigration, low-skilled unemployment and medium-skilled over-qualification, ii) the polarization effect where both low- and high-skilled wages increase relative to the medium-skilled. The model is calibrated using German data. The key findings are: (i) a migration-induced supply shock of medium-skilled workers decreases the low-skilled unemployment rate because of the endogenous benefits; (ii) immigration of medium-skilled labour together with some high-skilled labour has a positive effect on output per capita; (iii) migration of only medium-skilled labour has a neutral impact on GDP per capita.

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  • Muysken, Joan & Vallizadeh, Ehsan & Ziesemer, Thomas, 2012. "Migration, Unemployment, and Over-qualification: A Specific Factors-Model Approach," EconStor Preprints 67479, ZBW - Leibniz Information Centre for Economics.
  • Handle: RePEc:zbw:esprep:67479
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    2. Jinno, Masatoshi & Yasuoka, Masaya, 2021. "Endogenous fertility and unemployment -Considering the effects of immigrants through school system," MPRA Paper 106379, University Library of Munich, Germany.

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    More about this item

    Keywords

    Medium-Skilled Migration; Wage and Price Setting; Specific Factors Model; Unemployment; Over-qualification; Wage Polarization;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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