NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Immigration, Investment and Real Wages

Elise S. Brezis, Paul Krugman

NBER Working Paper No. 4563
Issued in December 1993
NBER Program(s):   ITI

When a country is the recipient of large-scale, politically motivated immigration -- as has been the case for Israel in recent years -- the initial impact is to reduce real wages. Over the longer term, however, the endogenous response of investment, together with increasing returns, may well actually increase real earnings. If immigration itself is not wholly exogenous, but responds to real wages, there may be multiple equilibria. That is, optimism or pessimism about the success of the economy at absorbing immigrants may constitute a self-fulfilling prophecy.

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Document Object Identifier (DOI): 10.3386/w4563

Published: Journal of Population Economics, Vol. 9, no. 1 (1996): 83-93.

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