Effects of migration with endogenous labor supply and heterogeneous skills
|Title||Effects of migration with endogenous labor supply and heterogeneous skills|
|Publication Type||Working Paper|
|Year of Publication||2021|
|Authors||Atzeni, G, Deidda, LG, Delogu, M, Paolini, D|
|ISBN Number||978 88 68513 801|
|Keywords||Labor Supply, migration, Monopolistic Competition, Welfare Analysis|
We analyze the effects of migration allowing for endogenous labor supply in a standard two-region model with monopolistically competitive producers and love for variety. We find that the welfare effects of migration depend on firms’ market power in the final good markets. If market power is sufficiently high, migration of low-skill individuals positively affects the welfare of native high skill individuals in the destination region, while low skill individuals are unaffected. Natives of the origin region are always better off, irrespective of their skills. Differently, if market power is sufficiently low, low skill migration makes both high and low individuals native of the destination region better off.