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Immigration, education and native wage inequality

  • Lumpe, Christian
  • Weigert, Benjamin

In this paper we analyse the effect of immigration on the labour market prospects for different skill groups among natives. We develop a model of endogenous labour supply in which immigration affects educational decisions of natives. We argue that the distributional consequences of immigration with respect to native between-skill-group inequality are ambiguous in general and crucially depend on the host country's level of educational attainment. We show that this result is robust irrespective of labour market institutions as, e.g., with a rigid wage regime featuring unemployment. Additionally, the model is applied to assess the impact on within-skill-group wage inequality.

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Paper provided by German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung in its series Working Papers with number 01/2010.

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Date of creation: 2010
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Handle: RePEc:zbw:svrwwp:012010
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  1. David Card, 2005. "Is the New Immigration Really So Bad?," NBER Working Papers 11547, National Bureau of Economic Research, Inc.
  2. Chiswick, Carmel U, 1989. "The Impact of Immigration on the Human Capital of Natives," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 464-86, October.
  3. Alexander Kemnitz, 2008. "Native Welfare Losses from High Skilled Immigration," CESifo Working Paper Series 2409, CESifo Group Munich.
  4. Greiner, Alfred & Rubart, Jens & Semmler, Willi, 2004. "Economic growth, skill-biased technical change and wage inequality: A model and estimations for the US and Europe," Journal of Macroeconomics, Elsevier, vol. 26(4), pages 597-621, December.
  5. Clemens Fuest & Marcel Thum, 1999. "Immigration and Skill Formation in Unionised Labour Markets," CESifo Working Paper Series 214, CESifo Group Munich.
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