Skilled immigration, offshoring, and trade

Mishita Mehra and Daisoon Kim

Journal of Economic Dynamics and Control, 2023, vol. 146, issue C

Abstract: We develop a dynamic general equilibrium model with skilled immigration, offshore labor hiring, and intermediate input trade to study the impact of skilled immigration policy changes in the US. Consistent with the data, the model accounts for a small subset of large firms that adjust offshore labor hiring in response to skilled immigration policy changes. Our calibrated model that matches the US economy shows that if we ignore the offshoring channel, we would overstate welfare gains to skilled domestic wage earners by approximately 20 percent following a 10 percent immigration cap reduction. The paper highlights the importance of considering the interactions between immigration, offshoring, and trade when studying the impacts of skilled immigration policy on domestic labor markets and trade.

Keywords: Immigration policy; Intermediate input trade; Offshoring; Skilled immigration (search for similar items in EconPapers)
JEL-codes: F16 F22 J61 J68 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:146:y:2023:i:c:s0165188922002822

DOI: 10.1016/j.jedc.2022.104579

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