Template-type: ReDIF-Paper 1.0
Author-Name: Muysken, Joan
Author-Email: j.muysken@maastrichtuniversity.nl
Author-Workplace-Name: School of Business and Economics, Maastricht University
Author-Name: Vallizadeh, Ehsan
Author-Email: e.vallizadeh@maastrichtuniversity.nl
Author-Workplace-Name: School of Business and Economics, Maastricht University
Author-Name: Ziesemer, Thomas
Author-Email: t.ziesemer@maastrichtuniversity.nl
Author-Workplace-Name: UNU-MERIT/MGSoG, and School of Business and Economics,
	 Maastricht University
Title: The impact of Medium-Skilled immigration: A general equilibrium approach
Abstract: This paper analyses the impact of the skill composition of migration 
	 flows on the host country’s labour market in a 
	 specific-factors-two-sector model with heterogeneous labour (low-, 
	 medium-, and high-skilled). We assume price-setting behaviour in both 
	 manufacturing and services sectors. The low- and medium-skilled labour 
	 markets are characterized by frictions due to wage bargaining. Moreover, 
	 we assume bumping down of unemployed medium-skilled workers into 
	 low-skilled service jobs whereas endogenous benefits create an 
	 interdependency between the two bargaining processes. Particular 
	 attention is paid to medium-skilled migration which enables us to 
	 augment the literature by replicating important stylized facts regarding 
	 medium skills, such as i) the interaction between immigration, 
	 low-skilled unemployment and medium-skilled over-qualification, ii) the 
	 polarization effect where both lowand high-skilled wages increase 
	 relative to the medium-skilled. The model is calibrated using German 
	 data. The key findings are: (i) a perfectly balanced migration has a 
	 neutral impact on the receiving economy due to international capital 
	 flows; (ii) immigration of medium-skilled labour together with some 
	 high-skilled labour lowers the low-skilled unemployment rate and has a 
	 positive effect on output per capita; (iii) migration of only 
	 medium-skilled labour has a neutral GDP per capita effect.
Classification-JEL: F22, J51, J52, J61, J64
Keywords: Medium-Skilled Migration, Wage and Price Setting, Specific Factors Model,
	 Unemployment, Over-qualification, Wage Polarization
Series: UNU-MERIT Working Papers
Creation-Date: 2012
Number: 055
File-URL: http://www.merit.unu.edu/publications/wppdf/2012/wp2012-055.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2012055