Temporary and Permanent Immigration under Unionization

Laixun Zhao and Kenji Kondoh

Review of Development Economics, 2007, vol. 11, issue 2, 346-358

Abstract: This paper investigates permanent and temporary immigration and remittance under the coexistence of unionized and non‐unionized manufacturing firms in a two‐sector economy. The impacts of immigration and remittance on respectively wages, employment, the union–non‐union wage gap and national welfare are analyzed. It is found that both permanent immigration (economy‐wide) and temporary immigration in agriculture bring positive effects on most variables (except the competitive wage), but widens the wage gap and causes income redistribution in the host country. However, if temporary immigrants work in manufacturing only, then all wages and the union–non‐union wage gap fall. That is, workers become more equally paid but poorer. In addition, remittance and globalization cause negative effects on union workers and employers. It is perhaps such consequences and the income redistribution effect of immigration that cause the media to paint a negative image of immigration.

Date: 2007
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