Employment Effects of Productivity Improvement and Migration of Skilled Workers

Brahim Saber ()

No 412, Working Papers from Economic Research Forum

Abstract: This paper studies the employment of unskilled labor effects on skilled labor productivity improvements, alternatively with and without skilled migration between two countries under the assumption that the level of unemployment benefits depends on the average income observed in each country. In models of bargaining wage, this level of benefits is generally considered exogenous. Endogeneity of the level of benefits leads to an interdependence between wages and benefits. As a consequence, the wage for unskilled labor is linked to the wage for skilled labor. Under this assumption, skilled productivity improvements, in absence of migration, decreases the employment of unskilled labor. With migration, the employment of unskilled labor in the host country is ambiguous, but in the send country, employment decreases.

Pages: 13 pages
Date: 2004-06-05, Revised 2004-06-05
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Published by The Economic Research Forum (ERF)

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