Working Paper: NBER ID: w28504
Authors: Isaac Ehrlich; Yun Pei
Abstract: We evaluate the economic consequences of immigration in a two-country, two-skill, overlapping-generations framework, where immigration, population, human and physical capital formation, and economic growth are endogenous variables. We go beyond extant literature by integrating physical capital in our model. This enables the derivation of new insights about the induced-immigration effects of exogenous triggers, including pull and push factors and policy variables, on the dynamic evolution of the “immigration surplus” in the short run versus the long run, in destination vs. source countries and in the global economy. The policy shifts we analyze include the easing of constraints on potential migrants’ labor and physical capital mobility, and the role of physical capital endowments. We also discuss the policy implications of asymmetries in the net benefits from immigration across destination and source countries.
Keywords: Immigration; Human Capital; Physical Capital; Economic Growth; Immigration Surplus
JEL Codes: F22; F43; J11; J24; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| immigration triggers (K37) | human and physical capital formation (J24) |
| human and physical capital formation (J24) | immigration surplus (J69) |
| immigration flows (F22) | immigration surplus (J69) |
| increase in labor supply due to immigration (J69) | returns to physical capital (E22) |
| increase in labor supply due to immigration (J69) | wage suppression for native workers (J79) |
| policy shifts (E65) | immigration surplus (J69) |
| pull and push factors (F22) | dynamics of immigration surplus (J69) |
| pull and push factors (F22) | growth paths of human and physical capital (O41) |