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THE IMMIGRATION SURPLUS REVISITED IN A GENERAL EQUILIBRIUM MODEL WITH ENDOGENOUS GROWTH*

Authors


  • *

    Presented at the second Workshop of the EU Fifth Framework Programme project “ European Enlargement: The Impact of East-West Migration on Growth and Employment”, Vienna, and at seminars at Greenwich University and Universitat Autonoma de Barcelona. We have benefited from comments by the participants at these presentations, as well as from those of two anonymous referees. Financial support from the EU Fifth Framework Programme is gratefully acnowledged.

Abstract

ABSTRACT We revisit the influential work of Borjas (1995) on the economic gain to the host population from immigration—“the immigration surplus.” We develop his analysis by using a general equilibrium endogenous growth model with endogenous capital and several sectors, including an R&D sector driving growth. Skilled immigration leads to a bigger R&D sector share resulting in higher long-term growth. If skilled labor and physical capital are complements, this growth gain increases. Growth effects on the immigration surplus dominate the purely static effects of Borjas, but are not sufficient to eliminate the emergence of losers (skilled natives) within the host population.

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