Immigrants and Natives in General Equilibrium Trade Models

54 Pages Posted: 6 Sep 2000 Last revised: 20 Jun 2022

See all articles by Daniel Trefler

Daniel Trefler

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

Date Written: October 1997

Abstract

This paper makes three observations about international trade and immigration. (i)" Borjas has argued that immigration may yield a net social benefit even though it hurts those less-skilled workers who directly compete with immigrants. I show that this closed-economy" argument unravels when imbedded in the Ricardian or Heckscher-Ohlin models of international" trade. (ii) Following Wood and Feenstra-Hanson, I argue that within an industry those goods" produced abroad use more unskilled labor than those goods produced in the United States. How" much more depends on whether the good is produced in a developed or developing country. " After transparently incorporating this into a new factor content study I find that changes in U.S." trade patterns almost certainly battered wages of those at the very bottom of the skill ladder. (iii)" Despite globalization pressures, I find little evidence of earnings convergence for a sample of 75" countries over the 1963-92 period. This holds true even after controlling for education and workers' industry of affiliation.

Suggested Citation

Trefler, Daniel, Immigrants and Natives in General Equilibrium Trade Models (October 1997). NBER Working Paper No. w6209, Available at SSRN: https://ssrn.com/abstract=225967

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