Immigration, Search, and Redistribution: A Quantitative Assessment of Native Welfare

44 Pages Posted: 4 Nov 2014

See all articles by Michele Battisti

Michele Battisti

University of Glasgow; CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Gabriel J. Felbermayr

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Giovanni Peri

University of California, Davis - Department of Economics

Panu Poutvaara

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; ifo Institut - Leibniz-Institut fuer Wirtschaftsforschung an der Universitaet Muenchen e.V.; CESifo (Center for Economic Studies and Ifo Institute); CReAM; IZA Institute of Labor Economics

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Date Written: October 22, 2014

Abstract

We study the effects of immigration on native welfare in a general equilibrium model featuring two skill types, search frictions, wage bargaining, and a redistributive welfare state. Our quantitative analysis suggests that, in all 20 countries studied, immigration attenuates the effects of search frictions. These gains tend to outweigh the welfare costs of redistribution. Immigration has increased native welfare in almost all countries. Both high-skilled and low-skilled natives benefit in two thirds of countries, contrary to what models without search frictions predict. Average total gains from immigration are 1.25% and 1.00% for high and low skilled natives, respectively.

Keywords: immigration, search, labor market frictions, fiscal redistribution, cross-country comparisons

JEL Classification: F220, J610, J640

Suggested Citation

Battisti, Michele and Felbermayr, Gabriel J. and Peri, Giovanni and Poutvaara, Panu, Immigration, Search, and Redistribution: A Quantitative Assessment of Native Welfare (October 22, 2014). CESifo Working Paper Series No. 5022, Available at SSRN: https://ssrn.com/abstract=2518346 or http://dx.doi.org/10.2139/ssrn.2518346

Michele Battisti

University of Glasgow ( email )

Adam Smith Business School
Glasgow, Scotland G12 8LE
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Gabriel J. Felbermayr

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Giovanni Peri

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-3033 (Phone)
530-752-9382 (Fax)

Panu Poutvaara (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

HOME PAGE: http://www.iiv.vwl.uni-muenchen.de/index.html

ifo Institut - Leibniz-Institut fuer Wirtschaftsforschung an der Universitaet Muenchen e.V. ( email )

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Munich, 01069
Germany
00498992241372 (Phone)

HOME PAGE: http://https://www.ifo.de/poutvaara-p

CESifo (Center for Economic Studies and Ifo Institute) ( email )

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Munich, DE-81679
Germany

CReAM ( email )

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IZA Institute of Labor Economics ( email )

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Germany

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