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Endogenous Skill Formation: Labor Market Integration by an Immigration

Titas Bandopadhyay and Sarbajit Chaudhuri ()

Journal of Economic Integration, 2013, vol. 28, 183-200

Abstract: The paper fabricates endogenous skill formation in a two-sector general equilibrium model where the unemployment of the skilled workers is caused by efficiency wage. The paper also examines the effects of the immigration of unskilled labor, the emigration of skilled labor, and the inflow of foreign capital on unemployment, skilled-unskilled wage inequality, and the level of skill formation in each unskilled working family. We find that the immigration of unskilled labor raises both the rate and level of unemployment of the skilled labor and lowers both the relative skilled-unskilled wage inequality and the level of skill formation in each unskilled working family under certain conditions. However, the emigration of skilled labor or the inflow of foreign capital gives opposite results.

Keywords: Skill Formation; Wage Inequality; Unemployment; Skilled Labor (search for similar items in EconPapers)
JEL-codes: F13 J41 J64 O15 (search for similar items in EconPapers)
Date: 2013
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Handle: RePEc:ris:integr:0596