Immigration, Search and Redistribution

Michele Battisti (), Gabriel Felbermayr, Giovanni Peri and Panu Poutvaara

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: What are the welfare effects of immigration on low-skilled and high-skilled natives? To address this question, we develop a general equilibrium model featuring two skill types, search frictions, wage bargaining, and a welfare state that redistributes income through unemployment benefits and the provision of public goods. Our quantitative analysis suggests that, in all 20 countries studied, immigration attenuates the effects of search frictions. The resulting gains tend to outweigh the welfare costs of redistribution. Immigration has increased native welfare in almost all countries. In two-thirds of countries, both high- and low-skilled natives have benefited from the presence of immigrants, contrary to what models without search frictions or redistribution predict. Average total welfare gains from migration are 1.25% and 1.00% for high- and low-skilled natives, respectively.

JEL-codes: F22 J61 J64 (search for similar items in EconPapers)
Date: 2018-08-01
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Citations: View citations in EconPapers (45)

Published in Journal of the European Economic Association 4 16(2018-08-01): pp. 1137-1188

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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:58912

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