Discussion Paper Details

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Title: Mass Migration, Unions, and Fiscal Migration Policy

Author(s): Anette Gehrig, Christoph M Schmidt and Klaus F Zimmermann

Publication Date: October 1992

Keyword(s): Fiscal Migration Policy, Heterogeneous Labour, Migration and Unions

Programme Area(s): Human Resources

Abstract: Standard economic reasoning based on competitive labour markets suggests that migrant inflow will unambiguously lead to allocative gains for the native population of a host country. Even abstracting from the costs of integration, however, this result is not robust when important labour market imperfections are considered. Much of the migration literature focuses on the determination of the size of the immigration flow given a fixed minimum wage and the level of unemployment in the destination area. By contrast, this paper concentrates on the mechanism of wage determination in the receiving country. The model depicts a situation where one large monopoly union acts on behalf of the whole workforce. Depending on the arguments of the union objective function and on whether labour is heterogeneous, an optimal size of immigration may exist. These considerations could form the basis for welfare-improving government policies.

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Bibliographic Reference

Gehrig, A, Schmidt, C and Zimmermann, K. 1992. 'Mass Migration, Unions, and Fiscal Migration Policy'. London, Centre for Economic Policy Research.