Migration, Unemployment, and Skill Downgrading

49 Pages Posted: 26 Mar 2015

See all articles by Joan Muysken

Joan Muysken

University of Maastricht

Ehsan Vallizadeh

Maastricht University - Department of Economics; Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Thomas Ziesemer

Maastricht University - Department of Economics; UNU-MERIT

Date Written: April 2015

Abstract

In this paper, we analyze the labor market impacts of immigration under flexible and rigid labor market regimes. A general equilibrium framework is developed, accounting for skill heterogeneity and labor market frictions, where unemployed medium‐skilled manufacturing workers are downgraded into low‐skilled service jobs, while low‐skilled service workers might end up unemployed. The analytical analysis shows that medium‐skill immigration decreases low‐skilled unemployment under the flexible regime, indicating a complementarity effect, while the rigid regime induces a substitution effect, leading to low‐skilled unemployment. Moreover, it leads to wage polarization. In a numerical analysis, the economic effects of different migration scenarios are quantified.

Keywords: Medium‐skilled migration, skill downgrading, specific factors model, unemployment, wage and price setting

JEL Classification: F22, J51, J52, J61, J64

Suggested Citation

Muysken, Joan and Vallizadeh, Ehsan and Ziesemer, Thomas, Migration, Unemployment, and Skill Downgrading (April 2015). The Scandinavian Journal of Economics, Vol. 117, Issue 2, pp. 403-451, 2015. Available at SSRN: https://ssrn.com/abstract=2584773 or http://dx.doi.org/10.1111/sjoe.12104

Joan Muysken (Contact Author)

University of Maastricht ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

Ehsan Vallizadeh

Maastricht University - Department of Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Thomas Ziesemer

Maastricht University - Department of Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

UNU-MERIT ( email )

Boschstraat 24
Maastricht, 6211AX
Netherlands

HOME PAGE: http://www.merit.unu.edu/about/profile.php?id=58

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