Munich Personal RePEc Archive

A Theory on the Economic Impacts of Immigration

Harashima, Taiji (2017): A Theory on the Economic Impacts of Immigration.

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Abstract

The standard view on the economic impact of immigration has been criticized for its inability to solve the “immigration policy puzzle.” It also has a problem in that the “net” income of heterogeneous workers is equalized. These problems arise because the standard view generally depends on a production function in which the elasticity of substitution between heterogeneous workers is constant. This paper constructs an alternative production function in which the elasticity of substitution between heterogeneous workers is not constant and is instead based on a model of total factor productivity. The alternative view presented based on this production function indicates that an “open door” policy is not necessarily economically optimal for host countries under some conditions

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