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Welfare effects of immigration in a dual labor market

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  • Fuest, Clemens
  • Thum, Marcel

Abstract

The paper analyses the welfare effects of immigration when some sectors of the economy are characterized by wage bargaining between unions and employers. We show that immigration is unambiguously beneficial if the wage elasticity of labor demand in the competitive sectors is smaller than in the unionised sectors. In the opposite case, the welfare effect of immigrat ion is ambiguous; little immigration then reduces the native population's welfare, whereas large scale immigration tends to enhance welfare.
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  • Fuest, Clemens & Thum, Marcel, 2000. "Welfare effects of immigration in a dual labor market," Regional Science and Urban Economics, Elsevier, vol. 30(5), pages 551-563, September.
    • Handle: RePEc:eee:regeco:v:30:y:2000:i:5:p:551-563
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    1. Oswald, A. J., 1995. "Efficient contracts are on the labour demand curve: Theory and facts," Labour Economics, Elsevier, vol. 2(1), pages 102-102, March.
    2. Fuest, Clemens & Thum, Marcel, 2001. "Immigration and skill formation in unionised labour markets," European Journal of Political Economy, Elsevier, vol. 17(3), pages 557-573, September.
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    Cited by:

    1. Laixun Zhao & Kenji Kondoh, 2007. "Temporary and Permanent Immigration under Unionization," Review of Development Economics, Wiley Blackwell, vol. 11(2), pages 346-358, May.
    2. Moritz Bonn, 2011. "The Effects of High Skilled Immigration in a Dual Labour Market with Union Wage Setting and Fiscal Redistribution," MAGKS Papers on Economics 201121, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    3. Moller, Joachim, 2001. "Regional Adjustment Dynamics," Discussion Paper Series 26180, Hamburg Institute of International Economics.
    4. Sarbajit Chaudhuri & Jayanta Kumar Dwibedi, 2022. "Anti‐immigration policy in developed countries: Welfare and distributional implications for developing economies," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(3), pages 358-381, September.
    5. Kemnitz, Alexander, 2008. "Can immigrant employment alleviate the demographic burden? The role of union centralization," Economics Letters, Elsevier, vol. 99(1), pages 123-126, April.
    6. Kaczmarczyk, Pawel, 2015. "Burden or Relief? Fiscal Impacts of Recent Ukrainian Migration to Poland," IZA Discussion Papers 8779, Institute of Labor Economics (IZA).
    7. Alexander Kemnitz, 2006. "Immigration as a commitment device," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 299-313, June.
    8. Fuest, Clemens & Thum, Marcel, 2001. "Immigration and skill formation in unionised labour markets," European Journal of Political Economy, Elsevier, vol. 17(3), pages 557-573, September.
    9. Puhani, Patrick A. & Frölich, Markus, 2002. "Immigration and Heterogeneous Labor in Western Germany: A Labor Market Classification Based on Nonparametric Estimation," ZEW Discussion Papers 02-01, ZEW - Leibniz Centre for European Economic Research.
    10. Pawel Kaczmarczyk, 2013. "Are immigrants a burden for the state budget? Review paper," EUI-RSCAS Working Papers p0356, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    11. Gelan, Ayele & Al-Shamali, Shaima & Awadh, Wafa, 2023. "Economic and welfare effects of immigration policy: Lessons from the experience of Kuwait," Journal of Policy Modeling, Elsevier, vol. 45(5), pages 1015-1035.
    12. Jakubiak Igor, 2017. "Migration and Welfare Systems – State of the Art and Research Challenges," Central European Economic Journal, Sciendo, vol. 1(48), pages 51-70, November.
    13. Vikhrov Dmytro, 2013. "Welfare Effects of Labor Migration," CERGE-EI Working Papers wp491, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    14. Clemens Fuest & Marcel Thum, 2001. "Gains from migration in imperfect labour markets?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(08), pages 28-31, May.
    15. Jean Gabszewicz & Skerdilajda Zanaj, 2020. "Migration: A theoretical comparison on countries’ welfare," International Journal of Economic Theory, The International Society for Economic Theory, vol. 16(2), pages 167-183, June.
    16. König, Jan & Skupnik, Christoph, 2012. "Labor market integration of migrants: Hidden costs and benefits in two-tier welfare states," Discussion Papers 2012/5, Free University Berlin, School of Business & Economics.
    17. Moritz Bonn, 2011. "High Skilled Immigration Policy and Union Wage Setting," Volkswirtschaftliche Diskussionsbeiträge 147-11, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht, revised 27 Aug 2012.
    18. Kemnitz, Alexander, 2003. "Unemployment, Technology and the Welfare Effects of Immigration," Discussion Papers 611, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    19. Chletsos, Michael & Roupakias, Stelios, 2012. "Immigration, Unemployment and Growth: Empirical Evidence from Greece," MPRA Paper 39861, University Library of Munich, Germany.

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