The effect of immigration on the wage of natives, combining intensive and extensive labour supply margins

Eliane Badaoui and Frank Walsh ()
Additional contact information
Eliane Badaoui: EconomiX, University Paris Nanterre
Frank Walsh: UCD Dublin: University College Dublin

Journal of Economics, 2025, vol. 146, issue 1, No 1, 57 pages

Abstract: Abstract We incorporate positive labour supply elasticities on the intensive and extensive margins into a standard model looking at the impact of immigration on hourly and weekly wages in the host region. When natives and migrants are perfect substitutes, a higher labour supply elasticity on the extensive margin reduces the magnitude of the negative hourly and weekly wage elasticity resulting from immigration. Conversely, a higher labour supply elasticity on the intensive margin is very likely to amplify the negative impact of immigration on the weekly wage, due to a reduction in weekly working hours. Simulations suggest that incorporating labour supply effects offsets negative wage effects, especially for parameter values that would otherwise imply a relatively large negative wage elasticity from immigration. The change in the wage elasticity of migration from incorporating labour supply effects is often small, but for special cases where labour supply elasticities are substantial the effects can be important.

Keywords: Migration; Wages; Labour supply; Extensive margin; Intensive margin (search for similar items in EconPapers)
JEL-codes: F22 J31 J61 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00712-025-00903-3 Abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:146:y:2025:i:1:d:10.1007_s00712-025-00903-3

DOI: 10.1007/s00712-025-00903-3

Access Statistics for this article

Journal of Economics is currently edited by Giacomo Corneo

More articles in Journal of Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().