Immigration and native welfare

Felbermayr, Gabriel und Kohler, Wilhelm K. (2007): Immigration and native welfare. In: International Economic Review, Vol. 48, No. 3: pp. 731-760

Abstract

This article unifies two approaches for identifying the welfare and wage effects of immigration, one emphasizing the immigration surplus, the other stressing a potential welfare loss due to a terms-of-trade effect. We decompose the native welfare effect into a standard complementarity effect, augmented by a Stolper-Samuelson effect, and a terms-of-trade effect. We illustrate the welfare and wage effects of endogenous goods prices in a stylized-specific factors model. Finally, we calibrate this model to a generic OECD economy and provide simulation results. The key insight is that endogenous goods prices play a quantitatively important role, sometimes even overturning received results.

• Item Type: Journal article
• Faculties: Economics; Economics > Chairs > CESifo-Professorship for International Trade
• Subjects: 300 Social sciences > 330 Economics
• Language: English