Migration, unemployment, and skill downgrading

J. Muysken, E. Vallizadeh, T.H.W. Ziesemer

Research output: Contribution to journalArticleAcademicpeer-review

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.
Original languageEnglish
Pages (from-to)403-451
Number of pages49
JournalScandinavian Journal of Economics
Volume117
Issue number2
DOIs
Publication statusPublished - Apr 2015

Keywords

  • Medium-skilled migration
  • skill downgrading
  • specific factors model
  • unemployment
  • wage and price setting
  • F22
  • J51
  • J52
  • J61
  • J64
  • US LABOR-MARKET
  • BRAIN-DRAIN
  • IMMIGRATION
  • WAGES
  • EARNINGS
  • GROWTH
  • ASSIMILATION
  • POLARIZATION
  • IMPACT

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