Immigration and Unemployment of Skilled and Unskilled Labor

Abstract

This paper discusses the problem of unemployment in developed countries that faces international labor movement. There are two types of unemployment. The first traditional type of unemployment exists simply because the common wage rate is fixed and higher than the equilibrium level. The second one may exist when the wage rate in one sector is high and fixed, while that in the other is flexible. On the other hand, an extensive movement of labor among countries has been observed. Thus, this paper investigates the effects of immigration and other policies on the two types of unemployment.

Someday My Prince Will Come: Unemployment, Income Transfer and International Factor Movement

“…This analysis is an extension of the mobile-capital HT model developed by Corden and Findlay (1975) and followed by Batra and Naqvi (1987) and Yabuuchi (2006) among others. Yabuuchi (2006) introduces the difference between skilled-labor and unskilled-labor and the third sector into the standard mobile-capital HT model and analyzes the relation between unemployment and the international movement of two types of labor and capital by paying special attention to the existence of the third sector as a labor absorbing sector.…”

“…Yabuuchi (2006) introduces the difference between skilled-labor and unskilled-labor and the third sector into the standard mobile-capital HT model and analyzes the relation between unemployment and the international movement of two types of labor and capital by paying special attention to the existence of the third sector as a labor absorbing sector. In this three sector model, the effects of production subsidies, wage policy and immigration on unemployment of both skilled and unskilled labor are examined.…”