The Effects of Immigrants on the Income of Natives

Abstract

This paper studies the economic effects of immigration on the income of natives. We assume a world with flexible prices. The price reactions guarantee the full employment of all inputs at any time. Our model is a one sector growth model with two homogeneous inputs, capital K and labor L. The technology is described by the CES-production function:

$$ {Y_t} = A \cdot {\left[ {\alpha {K_t}^{ - \mu } + \left( {1 - \alpha } \right)L_{_t}^{ - \mu }} \right]^{ - \frac{1}{\mu }}} $$

((1))

with A < 0 and 0 > α > 1.