Nottingham Centre for Research on
Globalisation and Economic Policy (GEP)

GEP Research Paper 08/31

 

Unemployment and the Immigration Surplus

 

Udo Kreickemeier and Michael S. Michael

Summary

In a small open economy framework that features unemployment of unskilled labour, we examine the effect of unskilled immigration on employment of natives and on native welfare.

 

Abstract

 

Within a small open economy fair wage model with unemployment of unskilled workers, we show that exogenous unskilled immigration increases the welfare of natives if the elasticity of the inverse labour demands exceeds a positive finite threshold. This threshold depends positively on the displacement ratio of native workers by immigrants and negatively on the share of immigrants in the unskilled workforce.

 

Issued in September 2008 

 

This paper is available in PDF format

 

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