a column by Gaetano Basso, Giovanni Peri and Ahmed Rahman for VOX: CEPR’s Policy Portal
The US and Europe have both seen wage polarisation in the last three decades, in parallel with increasing technical automation. This column analyses the impact of immigration on this wage divergence via its effect on the labour supply side. It finds that immigration partially reverses natives’ polarisation of employment opportunities and wages by expanding aggregate demand and allowing natives to move to better paying occupations. Policies to reduce low-skilled migration with the aim of favouring native middle-class labour market opportunities may in fact do the opposite.
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