Search

Using a two-country macroeconomic model with labor migration, we investigate how changes in unskilled foreign workers' accessibility to the labor market affect unskilled native workers. We assume that both countries' workers are unskilled, and each country has a single labor market where unskilled labor is traded. We also assume that only a few of the immigrant workers can enter the labor market due to impediments to foreign worker participation in the labor market, and foreign workers are paid lower nominal wages than native workers. We show that the sum of real-consumption wages (nominal wages divided by the consumer price index) paid to native workers is likely to become larger (smaller) as more foreign workers enter the labor market if wage differentials between native and foreign workers are large (small). This is because increases in foreign workers' accessibility to the labor market make native worker real-consumption wages higher through increases in labor demand and they also make native worker real-consumption wages lower through increases in labor supply. Former (Latter) effects are likely to be stronger than latter (former) effects in the case of larger (smaller) wage differentials between native and foreign workers. Our finding suggests that whether or not we should encourage unskilled foreign worker participation in the labor market depends on wage differentials.

Using a two-country macroeconomic model with labor migration, we investigate how changes in unskilled foreign workers' accessibility to the labor market affect unskilled native workers. We assume that both countries' workers are unskilled, and each country has a single labor market where unskilled labor is traded. We also assume that only a few of the immigrant workers can enter the labor market due to impediments to foreign worker participation in the labor market, and foreign workers are paid lower nominal wages than native workers. We show that the sum of real-consumption wages (nominal wages divided by the consumer price index) paid to native workers is likely to become larger (smaller) as more foreign workers enter the labor market if wage differentials between native and foreign workers are large (small). This is because increases in foreign workers' accessibility to the labor market make native worker real-consumption wages higher through increases in labor demand and they also make native worker real-consumption wages lower through increases in labor supply. Former (Latter) effects are likely to be stronger than latter (former) effects in the case of larger (smaller) wage differentials between native and foreign workers. Our finding suggests that whether or not we should encourage unskilled foreign worker participation in the labor market depends on wage differentials., 經營と經濟. vol.84(1), p.27-44; 2004