The Effects of High Skilled Immigration in a Dual Labour Market with Union Wage Setting and Fiscal Redistribution

Moritz Bonn ()
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Moritz Bonn: University of Siegen

No 201121, MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: We study the effects of high skilled immigration on employment and net income in the receiving economy where the market for low skilled labour is distorted by union wage setting and a redistributive unemployment benefit scheme. Based on the empirical fact that high and low skilled workers are close albeit imperfect substitutes, we show that high skilled immigration can either be beneficial or harmful, both in terms of employment and net income. More precisely, we conclude that a Pareto improvement can be achieved if the unemployment benefit level remains unaffected by high skilled immigration whereas an overall loss in net income cannot be ruled out if we suggest unemployment benefits to be funded by an exogenous egalitarian tax rate.

Keywords: Immigration; Imperfect Labour Markets; Fiscal Redistribution (search for similar items in EconPapers)
JEL-codes: F22 H53 J51 J61 (search for similar items in EconPapers)
Pages: 16pages
Date: 2011
New Economics Papers: this item is included in nep-lab and nep-mig
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https://www.uni-marburg.de/en/fb02/research-groups ... ers/21-2011_bonn.pdf First version, 2011 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201121

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