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Unskilled Immigration, Technical Progress, And Wages- Role Of The Household Sector

Author

Listed:
  • Sugata Marjit

    (Centre for Studies in Social Sciences, Kolkata-IN; Centre for Training and Research in Public Finance and Policy, Kolkata-IN; GEP, University of Nottingham, Nottingham-UK; CES- Ifo, Munich-Germany.)

  • Manoj Pant

    (Indain Institute of Foreign Trade,New Delhi-IN)

  • Sugandha Huria

    (Jawaharlal Nehru University, New Delhi-IN)

Abstract

This paper revisits a query regarding the relationship between unskilled immigration and skilled wage. In the recent episode of BREXIT, there is a perception that while people of London, which has a much greater proportion of immigrants’ inflow voted against BREXIT, regions which do not experience substantial inflows have voted in favour. Our simple general equilibrium model introduces a household sector where unskilled people are employed by skilled workers. Without the household sector, immigration of unskilled workers depresses skilled wage. But when we include the household sector, effective skilled wage may increase with a greater inflow of migrant workers. This is also a novel outcome in the theory of trade and factor flows. Our model also argues that though technical progress in a skill/human-capital intensive sector raises wage inequality, it no longer displaces traditional jobs. In fact, the usual negative impact of unskilled immigration on the traditional sector is mitigated by raising the returns to the unskilled workforce.

Suggested Citation

  • Sugata Marjit & Manoj Pant & Sugandha Huria, 2019. "Unskilled Immigration, Technical Progress, And Wages- Role Of The Household Sector," Working Papers 1936, Indian Institute of Foreign Trade.
    • Handle: RePEc:ift:wpaper:1936
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    References listed on IDEAS

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    Cited by:

    1. Rashmi Ahuja & Sugata Marjit, 2022. "Liberalizing Trade and Capital Flows and the Wage Gap: Does Sequencing Matter?," Open Economies Review, Springer, vol. 33(2), pages 375-389, April.
    2. Sugata Marjit & Gouranga Gopal Das, 2021. "Contact-Intensity, Collapsing Entertainment Sector and Wage Inequality: A Finite Change Model of Covid-19 Impact," CESifo Working Paper Series 9311, CESifo.
    3. Nivedita Mullick & Areej A. Siddiqui, 2021. "Economic Integration Agreements and Extensive Margin of Export: An Empirical Study of India," Working Papers 2155, Indian Institute of Foreign Trade.

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    More about this item

    Keywords

    Immigration; Skilled wage rate; Unskilled wage rate; Household sector; Technical progress;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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