Does Educational Choice Erode the Immigration Surplus?

Wido Geis-Thöne

No 80, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: Many countries pursue an immigration policy that is targeted at attracting high skilled workers. Borjas (1995) has shown that assuming perfect labor markets immigration leads to a welfare gain for the native population, the so-called immigration surplus. Thus, as the labor market for high skilled workers exhibits few frictions, high skilled immigration should lead to a welfare gain. Nevertheless, this argumentation implicitly assumes that immigration has no influence on the qualification structure of natives. In this paper I show that if natives anticipate high skilled immigration, fewer natives acquire a high education level. In labor markets that are not frictionless this effect can be such strong that high skilled immigration leads to a welfare loss for natives. Moreover, if high skilled migration is expected but not realized, this expectation generates a welfare loss.

JEL-codes: H62 J24 J61 (search for similar items in EconPapers)
Date: 2009
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