Immigration and Native Welfare
JKU Economics Working Paper No. 0401; U of Nottingham, Globaisation & Labour Research Paper No. 2004/04
54 Pages Posted: 22 Apr 2004
Date Written: February 2005
We unify two approaches towards identifying native welfare effects of immigration, one emphasizing the immigration surplus (Borjas, 1995, 1999), the other identifying a welfare loss due to terms-of-trade effects (Davis & Weinstein, 2002). We decompose the native welfare effect of immigration into the standard complementarity effect, augmented by a Stolper-Samuelson effect, and a terms-of-trade effect. Using a structural model with three skill-classes we derive propositions on the wage and native welfare effects of various immigration scenarios. A calibration-based simulation reveals that the size of the inflow and immigrant income repatriation are key determinants of the welfare-ranking of different immigration scenarios.
Keywords: International migration, factor movements, international trade, non-tradable goods
JEL Classification: F22, F41, J31
Suggested Citation: Suggested Citation