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The impact of immigrant dynasties on wage inequality

In: The Economics of Immigration and Social Diversity

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  • Michael Ben-Gad

Abstract

I construct a set of dynamic macroeconomic models to analyze the effect of unskilled immigration on wage inequality. The immigrants or their descendants do not remain unskilled – over time they may approach or exceed the general level of educational attainment. In the baseline model, the economy's capital supply is determined endogenously by the savings behavior of infinite-lived dynasties, and I also consider models in which the supply of capital is perfectly elastic, or exogenously determined. I derive a simple formula that determines the time discounted value of the skill premium enjoyed by college-educated workers following a change in the rate of immigration for unskilled workers, or a change in the degree or rate at which unskilled immigrants become skilled. I compare the calculations of the skill premiums to data from the US Current Population Survey to determine the long-run effect of different immigrant groups on wage inequality in the United States.

Suggested Citation

  • Michael Ben-Gad, 2006. "The impact of immigrant dynasties on wage inequality," Research in Labor Economics, in: The Economics of Immigration and Social Diversity, pages 77-134, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rleczz:s0147-9121(05)24003-7
    DOI: 10.1016/S0147-9121(05)24003-7
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