Abstract
The increased labor supply of migrant workers can make up labor shortage of host countries. Based on basic theoretic study, this paper tries to build a model to investigate the effect of rising number of unskilled migrant workers on different skilled workers. It indicates that both wages and employment for unskilled and skilled native workers will increase because the labor demand of native workers, if the effect of higher production (scale effect) larger than the effect of substitution between migrant and native workers. On the other hand, the migrant workers will have different effect on skilled and unskilled native workers.
Highlights
Nations has had to import workers to counter labor shortages brought on by economic growth
We find both output and substitution effect based on basic theoretic analysis on foreign workers
The labor market effects of foreign workers will be useful for the policymakers, especially those interested in understanding the impact of their policies on native labor market outcomes on employment and wages for skilled/unskilled workers, Assuming that the labor supply of native workers remains constant, based on a previous study New and Zimmermann(1994), we developed a model to measure the effect of foreign workers on the employment and wages of native workers
Summary
Nations has had to import workers to counter labor shortages brought on by economic growth. The increased supply of migrant workers may affect the wages and employment of skilled/unskilled workers. We find both output and substitution effect based on basic theoretic analysis on foreign workers. In Equation (1), Q can represent by production function for a firm by native and foreign workers, where αγ , βγ < 1
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