Should Native Workers Welcome Foreign Workers in Upturns?

Nikolaj Malchow-Møller, Jan Rose Skaksen

Research output: Working paperResearch

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Abstract

In this paper, we show that the welfare implications of immigration which takes place in upturns, and may be partly reversed in downturns, are very different from the implications of immigration usually found in static models. Abstracting from any gains to capital owners and native workers due to complementarities, we find that (especially temporary) immigration may still benefit native workers in a European type of labour market where minimum wages may bind in downturns. However, in the presence of hiring costs, these effects maybe reversed. Thus, promoting temporary immigration schemes may lead to adverse consequences if they also increase the costs of hiring foreign labour.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherCentre for Economic and Business Research, Copenhagen Business School
Number of pages33
Publication statusPublished - 2008
SeriesCEBR Discussion Paper
Number2008-12

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