We analyze the impact of the U.S. skill-biased immigration influx that took place between 2000 and 2009 within a search and matching model that allows for skill heterogeneity, differential search ...cost, and capital-skill complementarity. We find that although the skill-biased immigration raised the overall net income to natives, it had distributional effects. Specifically, unskilled native workers gained in terms of both employment and wages. Skilled native workers, however, gained in terms of employment but lost in terms of wages. Nevertheless, in an extension where skilled natives and immigrants are imperfect substitutes, even the skilled wage rises.
•Study of the effects of unskilled immigration on the employment and wages of native workers.•Search frictions in the labor market and skill heterogeneity among native workers.•Calibration of the ...model to Greek data.•Skilled native workers gain from immigration in terms of both employment and wages.•Unskilled native workers do not necessarily lose.
We analyze the impact of the immigration influx that took place during the years 2000–2007 in Greece on labor market outcomes. We employ a search and matching framework that allows for skill heterogeneity and differential unemployment income (search cost) between immigrants and natives. Within such a framework, we find that skilled native workers, who complement immigrants in production, gain in terms of both wages and employment. The effects on unskilled native workers, who compete with immigrants, on the other hand, are ambiguous and depend first on the presence of a statutory minimum wage and second on the way that this minimum wage is determined.
A controversial issue in the US is how to reduce the number of illegal immigrants and what effect this would have on the US economy. To answer this question we set up a two-country model with search ...in labor markets and featuring legal and illegal immigrants among the low skilled. We calibrate it to the US and Mexican economies during the 2000–2010 period. As immigrants – especially illegal ones – have a worse outside option than natives, their wages are lower. Hence, their presence reduces the labor cost of employers who, as a consequence, create more jobs per unemployed when there are more immigrants. Because of such effects our model shows increasing deportation rates and tightening border control weakens low-skilled labor markets, increasing unemployment of native low-skilled workers. Legalization, instead, decreases the unemployment rate of low-skilled natives and increases income per native.
We develop a general equilibrium model with search frictions in the labor market, wage bargaining and a welfare state, to study the impact of immigrants on the fiscal balance and welfare of natives ...in the host country. We distinguish immigrants by legal status and account for both their direct fiscal effects, through their tax contributions and transfer receipts, and their indirect fiscal and welfare effects, through their labor-market impact. We calibrate the model to the U.S. economy and find that legal immigrants reduce the tax burden on natives and increase natives' welfare, mainly because their tax contributions greatly exceed the transfers they receive. On the other hand, illegal immigrants' positive welfare impact stems mainly from their positive effect on job creation, which increases income to natives and in turn consumption. A legalization program leads to a fiscal gain, increases natives' welfare and is more beneficial to natives than a purely restrictive immigration policy that reduces the illegal immigrant population.
In this paper we analyze the economic effects of different immigration policies using a model that incorporates economic and policy features crucial to understanding the migrant flows into the US. We ...differentiate among the most relevant channels of immigration to the US: family-based, employment-based and undocumented. Moreover we explicitly account for earning incentives to migrate and for the role of immigrant networks in generating immigration opportunities. Hence, we can analyze the effect of policy changes through those channels. In our simulations comparing long-run steady states, highly skilled employment and unskilled immigrants generate larger surplus to US firms than natives do. Hence policies restricting their entry either directly or indirectly have a depressing effect on job creation and, in turn, on native labor markets. Our analysis gives new insights into the effect of policies as it accounts for the endogenous immigration response which is overlooked by most existing models.
•In some countries there is nepotism in government hiring practices.•We study nepotism in the public sector in a theoretical search and matching model.•The unemployed can use political or personal ...connections to “jump the queue”.•Nepotism only exists when public-sector wages are too high.•Nepotism mitigates the negative effects of high public-sector wages on unemployment.
We set up a model with search and matching frictions to understand the effects of employment and wage policies, as well as nepotism in hiring in the public sector, on unemployment and rent seeking. Conditional on inefficiently high public-sector wages, more nepotism in public-sector hiring lowers the unemployment rate because it limits the size of queues for public-sector jobs. Wage and employment policies impose an endogenous constraint on the number of workers the government can hire through connections.
•We study the effect of public-sector policies on education decisions.•The effects of policies depend on the labour-market structure.•Longer queues for skilled government jobs offset the gains of ...obtaining education.•Generous policies place downward pressure on private job creation.•We quantify the value of public-sector job security.
We set up a search and matching model with a private and a public sector to understand the effects of employment and wage policies in the public sector on unemployment and education decisions. The effects on the educational composition of the labor force depend crucially on the structure of the labor market. An increase of skilled public-sector wages has a small positive impact on educational composition and larger negative impact on the private employment of skilled workers, if the two sectors are segmented. If there are movements across the two sectors, it has large positive impacts on education and on skilled private employment. We highlight the usefulness of the model for policymakers by calculating the value of public-sector job security for skilled and unskilled workers.
This paper shows that introducing worker heterogeneity into a standard search and matching model can help increase the volatility of unemployment without violating the tight negative correlation ...between vacancies and unemployment, i.e., the Beveridge curve. In the model, periods of high job destruction and unemployment correspond with periods of more severe mismatch between the demands of firms and the qualifications of job seekers. A more severe mismatch translates into fewer successful employment matches conditional on the number of contacts per firm and, as a result, into a higher expected recruitment cost per worker hired, with adverse effects on incentives to open vacancies.
•Incorporates worker heterogeneity into a matching model with endogenous separations.•The model generates cyclical changes in matching efficiency.•The cyclical changes in matching efficiency enhance the volatility of job creation.•The model reconciles the countercyclicality of separations with the Beveridge curve.
We measure the size of gross worker flows between public and private sector and their importance for the dynamics of public employment over the last two decades in the US, UK, France and Spain. ...Between 10 and 35 percent of all inflows and outflows of the public sector are from and to private employment. These flows only account for 7 to 25 percent of the fluctuations of public employment.
•We quantify the size of worker flows between the public and private sector.•We use microdata from the US, UK, France and Spain.•Flows from the private to the public sector account for 10 to 35% of all inflows.•Flows between sectors explain less than 25% of fluctuations of public employment.
PDF
