Effects of migration with endogenous labor supply and heterogeneous skills

TitleEffects of migration with endogenous labor supply and heterogeneous skills
Publication TypeWorking Paper
Year of Publication2021
AuthorsAtzeni, G, Deidda, LG, Delogu, M, Paolini, D
Number21_11
ISBN Number978 88 68513 801
KeywordsLabor Supply, migration, Monopolistic Competition, Welfare Analysis
Abstract

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.

Citation Key7326