Essays in Immigration Economics

Abstract

The three main chapters of this dissertation focus on topics in Immigration Economics. In Chapter 2, we present a review of some of the most influential contributions in the literature grouped under two independent, yet connected lines of work that most closely relate to the rest of this dissertation: (1) Self-selection of immigrants, and (2) The impact that movements of labor across countries have on receiving economies. The chapter is not meant to be an exhaustive treatment of the scholarly contributions in the field, but rather provide a high-level summary of the most important findings and the different methodological approaches used to evaluate questions in Immigration Economics. In Chapter 3, we quantify the long-run impact that the introduction of a new immigration policy, pursuant to which only highly-educated individuals would be able to immigrate to a richer economy, would have. We investigate how such a policy would affect the incentives to invest in physical and human capital and how it would impact the total immigrant population of the receiving economy. We have explored these questions through the lens of a two-country, life-cycle, general equilibrium model, which features investment in human and physical capital, as well as endogenous migration decisions. Consistent with a lot of the literature on Immigration Economics, in our model most of the labor movements stems from the higher wages in the receiving country. A novel feature of the framework presented in this dissertation, is that the change of policy leads to changes in incentives and endogenous adjustments within the model. We have calibrated the model so that it is consistent with data on labor movements between the United States and the rest of the world, and have run a number of policy experiments to quantify the impact of limiting these movements to individuals with certain levels of human capital relative to workers in the receiving economy. Results indicate that in the long-run, both economies experience relatively small changes in wage rates and output per capita, while the size of the immigrant population experiences a more significant decrease. In Chapter 4 we present a number of extensions to the model in Chapter 3. We introduce return migration and partially portable human capital when living abroad. We also build out a more realistic structure for the labor productivity shocks and allow for the possibility that agents' productivities may depend on their country of residence. The results obtained from the extended model are qualitatively similar to those in Chapter 3.