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Journal of Economic Integration 2013 March;28(1) :183-200.
Endogenous Skill Formation: Labor Market Integration by an Immigration

Titas Kumar Bandopadhyay Sarbajit Chaudhuri 

Bagnan College, West Bangal, India
University of Calcutta, Kolkata, India
Corresponding Author: Titas Kumar Bandopadhyay ,Tel: +974 8109161, Email:
Copyright ©2013 Journal of Economic Integration
The paper fabricates endogenous skill formation in a two-sector general equilibrium model where the unemployment of the skilled workers is caused by efficiency wage. The paper also examines the effects of the immigration of unskilled labor, the emigration of skilled labor, and the inflow of foreign capital on unemployment, skilled-unskilled wage inequality, and the level of skill formation in each unskilled working family. We find that the immigration of unskilled labor raises both the rate and level of unemployment of the skilled labor and lowers both the relative skilled-unskilled wage inequality and the level of skill formation in each unskilled working family under certain conditions. However, the emigration of skilled labor or the inflow of foreign capital gives opposite results.

JEL Classification
F13: Trade Policy; International Trade Organizations
J41: Labor Contracts
J64: Unemployment: Models, Duration, Incidence, and Job Search
O15: Human Resources; Human Development; Income Distribution; Migration
Keywords: Skill Formation | Wage Inequality | Unemployment | Skilled Labor
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Product Market Integration and Wage Formation  2000 June;15(2)
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