TY  - JOUR
AU  - Borjas,George J.
TI  - The Analytics of the Wage Effect of Immigration
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14796
PY  - 2009
Y2  - March 2009
UR  - http://www.nber.org/papers/w14796
L1  - http://www.nber.org/papers/w14796.pdf
N1  - Author contact info:
George J. Borjas
Harvard Kennedy School
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-1393
Fax: 617/495-9532
E-Mail: gborjas@harvard.edu
AB  - The theory of factor demand has important implications for the study of the impact of immigration on wages in both sending and receiving countries. This paper examines the implications of the theory in the context of a model of a competitive labor market where the wage impact of immigration is influenced by such factors as the elasticity of product demand, the rate at which the consumer base expands as immigrants enter the country, the elasticity of supply of capital, and the elasticity of substitution across inputs of production. The analysis reveals that the short-run wage effect of immigration is negative in a wide array of possible scenarios, and that even the long run effect of immigration may be negative if the impact of immigration on the potential size of the consumer base is smaller than its impact on the size of the workforce. The closed-form solutions permit numerical back-of-the-envelope calculations of the wage elasticity. The constraints imposed by the theory can be used to check the plausibility of the many contradictory claims that appear throughout the immigration literature.
ER  -