BenFares Nolay.pdf


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Normally,  if  you  just  consider  the  law  of  supply  and  demand,  an  arrival  of  immigrants  on  
the   labor   force   market   should   increase   the   supply   of   labor   and   lower   the   price   and   in  
this   case   the   wage   level.   At   least,   this   is   true   if   you   observe   comparable   segments   of  
population.  

 
Figure  1:  The  law  of  supply  and  demand.  
I-­‐

We  can  observe  the  impact  on  prices  of  an  increase  in  demand  (price  goes  up).  

II-­‐

We  can  observe  the  impact  on  prices  of  an  increase  in  supply  (price  goes  down).  This  graph  is  
the  one  that  represent  theoretically  immigration  by  the  law  of  demand  and  supply.  

Indeed,  an  important  parameter  to  consider  for  studying  the  impact  of  immigration  on  
wage  level  is  that  the  effect  of  immigration  can  be  measured  only  at  equivalent  level  of  
skills,  experience,  study,  sector  and  profession.  
Empirically,   studies   made   before   the   21th   century   have   encounter   some   difficulties   to  
prove  a  sizable  negative  effect  on  wage  level  as  expected  by  the  theoretical  implication  
of   supply   and   demand   law.   For   example,   Friedberg   and   Hunt   (1995),   Smith   and  
Edmonston  (1997),  Borjas  (1994),  and  Lalonde  and  Topel  (1996)  all  concluded  that  the  
impact   of   immigration   on   wage   level   of   native   workers   is   small.   These   studies   were  
exploiting  the  geographical  clustering  of  immigrants,  separating  them  into  different  local  
labor   market   in   order   to   identify   the   effect   on   wage   level.   as   have   said   Carrasco   (2008)   :  
“Most   of   the   previous   studies   suggest   that,   at   most,   a   10%   increase   in   the   fraction   of  
immigrants  reduces  the  wages  of  native  workers  by  about  1%.”    

 

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