Seminar Papers, Institute for International Economic Studies, Stockholm University
How (Good) Immigration is: a matching analysis
Abstract: We present a dynamic two-country labour matching economy.
Workers decide whether to search in their native country (paying a small
cost) or to look for a job abroad (bearing an additional cost). Firms
choose the number of vacancies they post in each country according to the
average workers' characteristics inside it. Wages are determined in an
individual Nash bargaining. We show the existence of multiple steady-state
equilibria : a no-migration equilibrium and two migration equilibria. The
multiplicity of equilibria comes from a self-fulfilling prophecy phenomenon
linking average wages and incentives to migration. The equilibria are
Pareto-ranked, with migration-equilibria dominating no-migration.
Keywords: immmigration; migration; labour; Nash bargaining; multiple steady-state equilibria; Pareto efficiency; (follow links to similar papers)
JEL-Codes: F22; J61; (follow links to similar papers)
30 pages, October 30, 1997
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- This paper is published as:
Ortega, Javier, (2000), 'Pareto-improving immigration in an economy with equilibrium unemployment', Economic Journal, January, pages 1-21
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