Selective Immigration Policy and Its Impacts on Natives: A General Equilibrium Analysis

Selective Immigration Policy and Its Impacts on Natives: A General Equilibrium Analysis

Title:

Selective Immigration Policy and Its Impacts on Natives: A General Equilibrium Analysis

Number:

15/29

Author(s):

Şerife Genç İleri

Language:

English

Date:

November 2015

Abstract:

This paper uses a quantitative general equilibrium model to analyze the impacts of selective immigration policy targeting skilled immigrants on the college attainment rate, earnings inequality and welfare of natives. 1981-2008 period is analyzed in Canada, which is a country with a unique immigration policy explicitly targeting highly educated individuals. The results from the quantitative analysis reveal that the increase in the share of highly skilled immigrants generates a 7 percentage points lower college attainment rate among natives. The size and compositional changes in the immigrant population together lead to a 2.15 percentage points higher growth rate of college premium during this period. This increase is mainly driven by the rise in the relative size of the foreign-born labor force. An analysis of the long-run compensating differentials reveals that immigration generates a loss that corresponds to 3.59 to 4.45 percent permanent reduction in the consumption of natives. The increase in the relative share of immigrants is the main reason for this welfare loss. On the other hand, the compositional change towards college graduates benefits natives at the bottom and middle of the ability distribution.

Keywords:

International Migration, Aggregate Factor Income Distribution, Human capital, Wage differentials by Skill

JEL Codes:

F22; E25; J24; J31

Selective Immigration Policy and Its Impacts on Natives: A General Equilibrium Analysis
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