n.a.
Natives benefit from immigration mainly because of production complementarities between immigrant workers and other factors of production, and these benefits are larger when immigrants are sufficiently 'different' from the stock of native productive inputs. The available evidence suggests that the economic benefits from immigration for the United States are small, on the order of $6 billion and almost certainly less than $20 billion annually. These gains, however, could be increased considerably if the United States pursued an immigration policy that attracted a more skilled immigrant flow.
Sjaastad (1962) viewed migration in the same way as education: as an investment in the human agent. Migration and education are decisions that are indeed intertwined in many dimensions. Education and skill acquisition play an important role at many stages of an individual’s migration. Differential returns to skills in origin- and destination country are a main driver of migration. The economic success of the immigrant in the destination country is to a large extent determined by her educational background, how transferable these skills are to the host country labour market, and how much she invests into further skills after arrival. The desire to acquire skills in the host country that have a high return in the country of origin may also be an important reason for a migration. From an intertemporal point of view, the possibility of a later migration may also affect educational decisions in the home country long before a migration is realised. In addition, the decisions of migrants regarding their own educational investment, and their expectations about future migration plans may also affect the educational attainment of their children. But migration and education are not only related for those who migrate or their descendants. Migrations of some individuals may have consequences for educational decisions of those who do not migrate, both in the home- and in the host country. By easing credit constraints through remittances, migration of some may help others to go to school. By changing the skill base of the receiving country, migration may change incentives to invest in certain types of human capital. Migrants and their children may create externalities that influence educational outcomes of non-migrants in the destination country. This chapter will discuss some of the key areas that connect migration and education.
Most historical studies of immigration in nineteenth-century America have failed to distinguish among the labor-market experiences of different immigrant groups. Using a sample of some 4000 wage earners from turn-of-the-century Iowa, we examine the relative earnings of skilled and unskilled immigrants and suggest the factors which contributed to their very different post-immigration experiences. The results indicate that prior knowledge of a trade conferred upon immigrants an initial earnings advantage, but that unskilled immigrants managed subsequently to close some but not all of the gap by reaping greater returns to experience on the job.
The popular belief that immigrants have a large adverse impact on the wages and employment opportunities of the native-born population of the receiving country is not supported by the empirical evidence. A 10 percent increase in the fraction of immigrants in the population reduces native wages by 0-1 percent. Even those natives who are the closest substitutes with immigrant labor do not suffer significantly as a result of increased immigration. There is no evidence of economically significant reductions in native employment. The impact on natives' per capita income growth depends crucially on the immigrants' human capital levels.
This paper will argue for what is still a minority view among economists: that the main cause of the deteriorating situation of unskilled workers in developed countries has been expansion of trade with developing countries.(1) This view was advanced in Wood (1991a,b), and later developed into a book (Wood, 1994), but much the same line is taken by Batra (1993) and by Leamer (1993, 1994). It has been strongly attacked, however, by economists who think the effects of trade have been small-notably Lawrence and Slaughter (1993) and Krugman and Lawrence (1994). By way of a counterattack, this paper will outline the evidence that suggests that trade is the main cause of the problems of unskilled workers, respond to some criticisms of this evidence, and challenge the evidence for the alternative view that these problems are caused mainly by new technology. At the end, it will consider some of the implications of this debate for public policy.
A fortress Europe immigration policy is currently observed throughout the European Union. The European migration problem seems to be that, in the face of high and persistent unemployment rates, additional immigration implies further unemployment. This might not be true if immigration helps to erode institutional constraints and enhances labor market flexibility, a point that is seen of particular virtue in the European setting. The paper also argues that past European migration, although limited, has been positive for the labor markets, and there are only few alternative policy options in the future.
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