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Immigration, Human Capital and the Welfare of Natives

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  • Eberhard, Juan

Abstract

I analyze the effect of an unexpected influx of immigrants on the price of skill and hence on the earnings, human capital accumulation and educational attainment of native workers. In order to study these effects, I develop a general equilibrium model with heterogeneous workers who differ in their level of skill and in their ability to learn new skills. These workers accumulate human capital optimally using information about the current and future market price of skill to guide their decisions. To assess the impact of immigration, I compare simulated earnings in the presence of immigration with a series of counterfactual experiments. My findings suggest that immigration has a small negative direct effect on earnings, but a positive and relatively large impact indirectly through human capital accumulation and educational attainment. This latter mechanism explains 60% of the variations in earnings caused by immigration.

Suggested Citation

  • Eberhard, Juan, 2012. "Immigration, Human Capital and the Welfare of Natives," MPRA Paper 37844, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:37844
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    Cited by:

    1. Jennifer Hunt, 2017. "The Impact of Immigration on the Educational Attainment of Natives," Journal of Human Resources, University of Wisconsin Press, vol. 52(4), pages 1060-1118.
    2. Osborne Jackson, 2015. "Does immigration crowd natives into or out of higher education?," Working Papers 15-18, Federal Reserve Bank of Boston.
    3. Boldrin, Michele & Montes, Ana, 2015. "Modeling an immigration shock," European Economic Review, Elsevier, vol. 74(C), pages 190-206.
    4. Tumen, Semih, 2021. "The effect of refugees on native adolescents’ test scores: Quasi-experimental evidence from PISA," Journal of Development Economics, Elsevier, vol. 150(C).
    5. Peter McHenry, 2015. "Immigration and the Human Capital of Natives," Journal of Human Resources, University of Wisconsin Press, vol. 50(1), pages 34-71.
    6. Akin Serife Nuray, 2012. "Immigration, Fiscal Policy, and Welfare in an Aging Population," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-45, July.
    7. Luca Marchiori & Patrice Pieretti & Benteng Zou, 2018. "Immigration, Occupational Choice and Public Employment," Annals of Economics and Statistics, GENES, issue 131, pages 83-116.
    8. Ortega, Javier & Verdugo, Gregory, 2014. "The impact of immigration on the French labor market: Why so different?," Labour Economics, Elsevier, vol. 29(C), pages 14-27.
    9. Şerife Genç İleri, 2019. "Selective immigration policy and its impacts on Canada's native‐born population: A general equilibrium analysis," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(3), pages 954-992, August.
    10. Çakır, Selcen & Erbay, Elif & Kirdar, Murat Güray, 2021. "Syrian Refugees and Human Capital Accumulation of Native Children in Turkey," IZA Discussion Papers 14972, Institute of Labor Economics (IZA).
    11. Felipe González, 2020. "Immigration and human capital: consequences of a nineteenth century settlement policy," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 14(3), pages 443-477, September.
    12. Tumen, Semih, 2018. "The Impact of Low-Skill Refugees on Youth Education," IZA Discussion Papers 11869, Institute of Labor Economics (IZA).
    13. Dai, Tiantian & Liu, Xiangbo & Xie, Biancen, 2013. "The impact of immigrants on host country crime," Economics Letters, Elsevier, vol. 119(2), pages 157-161.
    14. Brunello, Giorgio & Lodigiani, Elisabetta & Rocco, Lorenzo, 2017. "Does Low Skilled Immigration Cause Human Capital Polarization? Evidence from Italian Provinces," IZA Discussion Papers 11062, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Human Capital; Immigration; Heterogeneous Agents;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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