UNSKILLED IMMIGRATION, TECHNICAL PROGRESS, AND WAGES- ROLE OF THE HOUSEHOLD SECTOR

Sugata Marjit, Manoj Pant () and Sugandha Huria
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Manoj Pant: Indain Institute of Foreign Trade,New Delhi-IN

No 1936, Working Papers from Indian Institute of Foreign Trade

Abstract: This paper revisits a query regarding the relationship between unskilled immigration and skilled wage. In the recent episode of BREXIT, there is a perception that while people of London, which has a much greater proportion of immigrants’ inflow voted against BREXIT, regions which do not experience substantial inflows have voted in favour. Our simple general equilibrium model introduces a household sector where unskilled people are employed by skilled workers. Without the household sector, immigration of unskilled workers depresses skilled wage. But when we include the household sector, effective skilled wage may increase with a greater inflow of migrant workers. This is also a novel outcome in the theory of trade and factor flows. Our model also argues that though technical progress in a skill/human-capital intensive sector raises wage inequality, it no longer displaces traditional jobs. In fact, the usual negative impact of unskilled immigration on the traditional sector is mitigated by raising the returns to the unskilled workforce.

Keywords: Immigration; Skilled wage rate; Unskilled wage rate; Household sector; Technical progress (search for similar items in EconPapers)
JEL-codes: F11 F20 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2019-01
New Economics Papers: this item is included in nep-int and nep-mig
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Related works:
Journal Article: Unskilled immigration, technical progress, and wages—Role of the household sector (2020)
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