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Department of Economics, Copenhagen Business School Working Paper Series, Department of Economics, Copenhagen Business School

No 12-2008:
Should Native Workers Welcome Foreign Workers in Upturns?

Nikolaj Malchow-Møller and Jan Rose Skaksen

Abstract: In this paper, we show that the welfare implications of immigration which takes place in upturns, and may be partly reversed in downturns, are very different from the implications of immigration usually found in static models. Abstracting from any gains to capital owners and native workers due to complementarities, we find that (especially temporary) immigration may still benefit native workers in a European type of labour market where minimum wages may bind in downturns. However, in the presence of hiring costs, these effects may be reversed. Thus, promoting temporary immigration schemes may lead to adverse consequences if they also increase the costs of hiring foreign labour.

Keywords: na; (follow links to similar papers)

JEL-Codes: E24; J61; (follow links to similar papers)

33 pages, January 1, 2008

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