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Immigration, Skill Heterogeneity and Qualification Mismatch

Liu, Xiangbo and Palivos, Theodore and Zhang, Xiaomeng (2014): Immigration, Skill Heterogeneity and Qualification Mismatch.

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Abstract

We investigate the effects of US immigration on native workers in a search and matching environment that allows for skill heterogeneity, differential search cost, cross-skill matching and imperfect transferability of human capital across borders. We find that cross-skill matching benefits the unskilled and hurts the skilled native workers. Similarly, new unskilled immigration benefits the low-skilled native workers and hurts the high-skilled. On the other hand, new skilled immigration benefits both skilled and unskilled natives. Moreover, when we simulate the effects of the actual US immigration influx that took place between the years 2000 and 2009, we find that both skilled and unskilled native workers gain. We also find that initially an improvement in the transferability of human capital benefits the high-skilled natives at the expense of the low-skilled. Nevertheless, below a certain overeducation ratio, further improvements in the transferability of human capital make both types of native workers worse off.

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