Working Paper: NBER ID: w14796
Authors: George J. Borjas
Abstract: The theory of factor demand has important implications for the study of the impact of immigration on wages. This paper derives the theoretical implications in the context of a general equilibrium model where the wage impact depends on the elasticity of product demand, the rate at which the consumer base expands as immigrants enter the receiving country, the elasticity of supply of capital, and the elasticity of substitution among inputs of production. The constraints imposed by the theory can be used to check the plausibility of the many contradictory claims that appear throughout the immigration literature.
Keywords: No keywords provided
JEL Codes: J23; J31; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher levels of immigration (K37) | lower wages of competing workers (J39) |
| higher levels of immigration (K37) | higher wages of complementary workers (J31) |
| immigration-induced supply shifts (J69) | distinct effects on wage levels and distributions (J31) |
| short-run wage elasticity must be negative (J31) | wealth shifts away from workers to owners of production resources (D33) |
| wage level in the long run (J31) | depends on capital-labor ratio (F16) |
| wage elasticity of immigration (J69) | can be quantified through specific functional forms (C20) |