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Felbermayr, Gabriel; Kohler, Wilhelm K. (2004): Immigration and native welfare. Working Paper / Department of Economics, Johannes Kepler University of Linz, 0401
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Abstract

We unify two approaches towards identifying native welfare effects of immigration, one emphasizing the immigration surplus (Borjas, 1995,1999), the other identifying a welfare loss due to terms-of-trade effects (Davis \& Weinstein, 2002). We decompose the native welfare effect of immigration into the standard complementarity effect, augmented by a Stolper-Samuelson effect, and a terms-of-trade effect. Using a structural model with three skill-classes we derive propositions on the wage and native welfare effects of various immigration scenarios. A calibration-based simulation reveals that the size of the inflow and immigrant income repatriation are key determinants of the welfare-ranking of different immigration scenarios.

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