Immigration, Investment and Real Wages

24 Pages Posted: 7 Sep 2000

See all articles by Elise S. Brezis

Elise S. Brezis

Bar-Ilan University - Department of Economics; National Bureau of Economic Research (NBER)

Paul R. Krugman

Princeton University - Woodrow Wilson School of Public and International Affairs; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: December 1993

Abstract

When a country is the recipient of large-scale, politically motivated immigration -- as has been the case for Israel in recent years -- the initial impact is to reduce real wages. Over the longer term, however, the endogenous response of investment, together with increasing returns, may well actually increase real earnings. If immigration itself is not wholly exogenous, but responds to real wages, there may be multiple equilibria. That is, optimism or pessimism about the success of the economy at absorbing immigrants may constitute a self-fulfilling prophecy.

Suggested Citation

Brezis, Elise S. and Krugman, Paul R., Immigration, Investment and Real Wages (December 1993). NBER Working Paper No. w4563. Available at SSRN: https://ssrn.com/abstract=226766

Elise S. Brezis

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
972-3-5318946 (Phone)
972-3-5353186 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Paul R. Krugman (Contact Author)

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States
609-258-4570 (Phone)
609-258-2809 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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