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The Effects of High Skilled Immigration in a Dual Labour Market with Union Wage Setting and Fiscal Redistribution

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  • Moritz Bonn

    (University of Siegen)

Abstract

We study the effects of high skilled immigration on employment and net income in the receiving economy where the market for low skilled labour is distorted by union wage setting and a redistributive unemployment benefit scheme. Based on the empirical fact that high and low skilled workers are close albeit imperfect substitutes, we show that high skilled immigration can either be beneficial or harmful, both in terms of employment and net income. More precisely, we conclude that a Pareto improvement can be achieved if the unemployment benefit level remains unaffected by high skilled immigration whereas an overall loss in net income cannot be ruled out if we suggest unemployment benefits to be funded by an exogenous egalitarian tax rate.

Suggested Citation

  • 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).
    • Handle: RePEc:mar:magkse:201121
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    References listed on IDEAS

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    More about this item

    Keywords

    Immigration; Imperfect Labour Markets; Fiscal Redistribution;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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