Frédéric Docquier, Çaǧlar Özden, Giovanni Peri

NBER Working Paper No. 16646
Issued in December 2010

In this paper, we simulate the long-run effects of migrant flows onwages of high-skilled and low-skilled non-migrants in a set ofcountries using an aggregate model of national economies. New in thisliterature we calculate the wage effect of emigration as well asimmigration. We focus on Europe and compare the outcomes for largeWestern European countries with those of other key destinationcountries both in the OECD and outside the OECD. Our analysis builds onan improved database of bilateral stocks and net migration flows ofimmigrants and emigrants by education level for the years 1990 through2000. We find that all European countries experienced a decrease intheir average wages and a worsening of their wage inequality because ofemigration. Whereas, contrary to the popular belief, immigration hadnearly equal but opposite effects: positive on average wages andreducing wage inequality of non-movers. These patterns hold true usinga range of parameters for our simulations, accounting for the estimatesof undocumented immigrants, and correcting for the quality of schoolingand/or labor-market downgrading of skills. In terms of wage outcomes,it follows that prevalent public fears in European countries aremisplaced; immigration has had a positive average wage effect on nativeworkers. Some concerns should be focused on the wage effect ofemigration, instead.