The Effects of Immigration in a Distorted Two-Sector Economy

Abstract

This paper examines the income, employment and distributional impact of immigration on a recipient economy facing an administered wage distortion. It is found that immigration increases the unemployment rate of the native population and shifts income distribution against labor and in favor of the nonlabor input. Its effect on the total income of the non-immigrants is, howeveq ambiguous, and depends on the relative importance of the increase in unemployment versus the net increase in the rent received by the owners of the non-labor input.626 Economic Inquiry Vol. XIX, October 1981 -(4)where we utilize the price of the modern sector good, PI, as numeraire, and where C, is the domestic consumption of commodity 2.The modern sector is especially characterized by an administered wage. This wage is assumed to be set by a trade union whose goal is to 3. One of our main interests is how immigration affects the mobility of domestic labor within the ewnornifmong sectors). In order to concentrate our attention on labor mobility, we are assuming that mo ' ity in the non-labor input does not occur. This is correct only if that input is sector-specific, andlor if the concern is only with the short-run. ECONOMIC INQUIRY

Immigration and Employment: Substitute Versus Complementary Labor in Selected African Countries

“…To understand immigration's impact in the context of a segmented labor market, we start with a modified version of the Rivera-Batiz (1981) model. Our modified model's main assumptions are: (i) both formal and informal sectors hire foreign workers, (ii) foreign and native workers could either have substitute or complementary skills sets, (iii) wages are flexible and (iv) labor markets are closed markets.…”

Undocumented Immigration and Host-Country Welfare: Competition Across Segmented Labor Markets*

“…1 Some models result in partial segmentation. In Rivera-Batiz (1988), migrants and natives compete for low-wage jobs, but only natives work in high-wage jobs. See also Djajic (1997) and Carter (1999).…”