Migration Policy in a Small Open Economy with a Dual Labor Market
The paper uses a two--sector efficiency--wage model to analyze the consequences of immigration for a small open economy with a dual labor market. Immigrants are characterized by an (exogenous) return probability. Legal regulations impose preferential hiring of natives or "old" immigrants. As a result, there is sectoral segregation between natives and immigrants, leading to discrimination of the type equal pay for equal work, but unequal "work." In the short run (with sector--specific capital), immigration has a positive first--order impact on natives' welfare if migration policy favors segregation through high return rates or restrictive hiring practices ("guest--worker system"). In the long run, its effect is only determined by factor intensities (2 ¥ 2 model). Finally, the improved integration of migrants yields efficiency gains and improves aggregate welfare of all residents. Copyright Blackwell Publishing Ltd. 2003
Year of publication: |
2003
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Authors: | Müller, Tobias |
Published in: |
Review of International Economics. - Wiley Blackwell, ISSN 0965-7576. - Vol. 11.2003, 1, p. 130-143
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Publisher: |
Wiley Blackwell |
Saved in:
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