We determine winners and losers of immigration using a general equilibrium search and matching model in which native and non-native employees, who are heterogeneous with respect to their skill level, produce different types of goods. Unemployment benefits and the provision of public goods are financed by a progressive taxation on wages and profits. The estimation of the baseline model for Italy shows that the presence of non-natives in 2017 led real wages of low and high-skilled employees to be 4% lower and 8% higher, respectively. Profits of employers in the low-skilled market were 6% lower, while those of employers in the high-skilled market were 10% higher. At aggregate level, total GDP was 14% higher, GDP per worker and the per capita provision of public goods 4% higher, while government revenues and social security contributions raised by 70 billion euros and 18 billion euros, respectively.
Download