Who is Hurt by Discimination?

The effects of discrimination of immigrants on the labour market are studied within a search and wage-bargaining setting including a risk of losing skills during the experience of unemployment. The negative effects of discrimination in the form of higher unemployment and lower wages spread to all workers, immigrants and natives, in all sectors of the economy. The effect is stronger for immigrants, but natives also suffer. An increase in the share of immigrants in the economy exacerbates the problems of discrimination.