Thursday, September 30, 2010

Immigration and the Economy: Food for Thought

Is everything that people usually believe about immigration and employment dead wrong? That’s what Rosemary Joyce, an anthropology professor at Berkeley, claims in a post on the Berkeley Blog.

A note for European readers: remember that the US labor market is characterized by much more flexibility of wages than European ones, making employment of low qualification immigrants much easier in the US than in Europe. Moreover the welfare protection is more extensive in Europe, attracting a larger pool of immigrants even though it weakens the effective labor supply and labor demand through higher cost of employment for firms and lower net wages for labor, due to a higher tax on labor.
Thus, the analysis of the immigration issue cannot be separated from an analysis of the unemployment effects of the regulation of labor markets and of the similarly negative effects of the payroll tax.

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