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The Effects of Immigration on the Destination Economy: The Theory

In: The Economics of Immigration

Author

Listed:
  • Örn B. Bodvarsson

    (St. Cloud State University)

  • Hendrik Berg

    (University of Nebraska)

Abstract

When immigrants enter a country, they affect the destination country’s economy in a variety of ways. This chapter surveys theoretical research since the 1960s on the macroeconomic and microeconomic effects of immigration on the destination country. Macro effects are measured by an “immigration surplus” that is usually positive but very small. The “micro” studies have focused on the distributional effects, and these have been substantial in magnitude. Estimates of how immigration affects natives depends on the assumptions of the model used to frame the analysis, such as the production function, number of goods produced, local immigrant consumption, native migration, and the time frame. We appraise the traditional labor market model’s predictions, and then we move to more detailed models that present a more nuanced story. Finally, this chapter examines how economists have begun to model immigration from a longer-run perspective, which requires the explicit recognition of “feedback mechanisms” that supplement the initial labor market effects covered in the traditional models.

Suggested Citation

  • Örn B. Bodvarsson & Hendrik Berg, 2009. "The Effects of Immigration on the Destination Economy: The Theory," Springer Books, in: The Economics of Immigration, chapter 0, pages 107-132, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-77796-0_5
    DOI: 10.1007/978-3-540-77796-0_5
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