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

45 Pages Posted: 25 Oct 2014

See all articles by Michele Battisti

Michele Battisti

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

Gabriel J. Felbermayr

University of Stuttgart-Hohenheim

Giovanni Peri

University of California, Davis - Department of Economics

Panu Poutvaara

University of Helsinki - Department of Economics; Helsinki Center of Economic Research (HECER); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

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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: F22, J61, J64

Suggested Citation

Battisti, Michele and Felbermayr, Gabriel J. and Peri, Giovanni and Poutvaara, Panu, Immigration, Search, and Redistribution: A Quantitative Assessment of Native Welfare. IZA Discussion Paper No. 8574. Available at SSRN: https://ssrn.com/abstract=2514767

Michele Battisti (Contact Author)

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

Poschinger Str. 5
Munich, 01069
Germany

Gabriel J. Felbermayr

University of Stuttgart-Hohenheim ( email )

Keplerstra├če 17
D-70174 Stuttgart
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

University of Helsinki - Department of Economics ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland

HOME PAGE: http://www.valt.helsinki.fi/blogs/poutvaar/

Helsinki Center of Economic Research (HECER) ( email )

FI-00014 Helsinki
Finland

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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