Is the skills mismatch important under skill-biased technological change and imperfect substitutability between immigrants and natives?

Pedro Gil, Susana Gabriel and Oscar Afonso

Economic Modelling, 2020, vol. 84, issue C, 38-54

Abstract: This paper contributes to the debate on the benefits and costs of immigration, by evaluating how the mismatch between educational attainment and occupations induced by immigration affects output per worker, the wage premium, and the economy's technological level in OECD host countries. To that end, we use an R&D growth model in which technological knowledge can be directed to either low- or high-skilled labour and thereby drives the dynamics of the key economic variables. There tends to be a significant economic impact of the skills mismatch due to immigration, which amplifies the effects of the mismatch in the native population. Nevertheless, countries with a higher contribution of immigration to the skills mismatch are not necessarily those with the higher contribution in terms of economic effects. Moreover, the size and sign of the latter may vary depending on the assessed economic indicator and from country to country. Cross-country differences regarding the initial level of the high-to low-skilled ratio and the size of its shift due to immigration play a crucial role.

Keywords: Immigration; Skills mismatch; Imperfect substitutability; Wage (skill) premium; Technological-knowledge bias; Endogenous growth (search for similar items in EconPapers)
JEL-codes: F22 O14 O31 O33 O47 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:84:y:2020:i:c:p:38-54

DOI: 10.1016/j.econmod.2019.03.006

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