ON THE EFFECTS OF IMMIGRATION ON HOST COUNTRIES

Abstract

Starting from the consolidated literature on the labour market effects of immigration (summarized in the second chapter in what follows) the aims of this work are: (i) to assess the impact of skilled immigration on income in destination countries (chapter 3) and (ii) to understand the relation between immigration and offshoring when asymmetric information about foreing born workers is assumed (chapter 4). So, the rest of the thesis is composed follows: Chapter 2, economic impact of migration on host countries: a survey, provides a survey of the literature on the effects of migration on the economic performances in host countries. The aim of the chapter is to provide a synthetic view of both theoretical and empirical literature to better understand how host economies are affected by changes in their foreign born population endowment. The chapter is intended to clear the ground for the following chapters. Chapter 3, Skilled migration and economic performances: evidence from OECD countries, investigates the effects of immigration flows and their human capital content on per capita GDP variation in 24 OECD host countries. Theoretical models conclude that the effect of immigrants in host country's income depends on the human capital content of migrants (Benhabib 1996); empirically the question is still open and this paper contributes to make light on this. So we propose an empirical estimation of the effects of immigrants and their human capital content on per capita GDP variation. Using an IV model to solve the endogeneity problem we found that high human capital content by immigrants has a positive effect on per capita GDP variation, but it is not enough to fully compensate the overall negative effects of migration on changes in per capita output. Chapter 4, Offshoring, migrants and natives workers: the optimal choice under asymmetric information, presents a theoretical model about the optimal choice for a firm between offshoring and hiring immigrant workers under asymmetric information about their ability and effort in production (symmetric information is assumed about home born workers). When a domestic firm hires an immigrant it doesn't know his ability; while when the firm goes abroad it uses local agent in order to buy additional information about workers, thus enforceable contracts may be set. We show that it is optimal for firms to produce low quality products offshoring the production abroad, while intermediate quality level products will be produced at home using foreign born workers. Finally, high quality products will be produced using native workers.