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GTAP Resource #2659

"Reducing illegal migrants in the U.S.: a dynamic CGE analysis"
by Dixon, Peter, Martin Johnson and Maureen Rimmer

We use the USAGE model to quantify the effects on the U.S. economy of policies that reduce the number of illegal migrants.
USAGE is a detailed, dynamic CGE model of the U.S. It has been developed at the Centre of Policy Studies, Monash University, in collaboration with the U.S. International Trade Commission.
For the present project, we create a labor-market-extended version of USAGE. In this extension, the labor force at the beginning of each year is divided into categories, defined by birth place (domestic and foreign), legal status (legal and illegal) and labor-market function in the previous year. Labor-market functions are:
employed in a U.S. occupation;
unemployed in the U.S.;
U.S. resident not in labor force;
in foreign labor-force;
foreign resident not in labor force.
For each category we specify labor-supply behaviour, that is offers from people in the category to different activities. Activities are defined by birthplace, legal status and labor-market function in the current year.
On the demand side, U.S. employers in each industry choose a cost-minimising bundle of labor inputs to satisfy their overall labor requirements. These requirements are specified as a nested CES function of inputs of labor by birthplace, legal status and occupation.
For labor in each birthplace, legal-status and occupational activity, we specify a wage-adjustment process in which the wage rate adjusts sluggishly to close gaps between demand and supply. This means that not all people who offer to work in a particular activity find employment in that activity. Equations are included to determine which offers are accepted and what happens to those who make unsuccessful offers.
We implement the labor-market-extension in a 38-industry, 50-occupation version of USAGE.
In the application part of the paper, we look at how policies to reduce illegal migrants would affect the U.S. economy over the period 2005 to 2019.

Resource Details (Export Citation) GTAP Keywords
Category: 2008 Conference Paper
Status: Published
By/In: Presented at the 11th Annual Conference on Global Economic Analysis, Helsinki, Finland
Date: 2008
Created: Rimmer, M. (4/12/2008)
Updated: Batta, G. (4/14/2008)
Visits: 2,271
- Labor market issues
- Dynamic modeling
- Baseline development
- North America

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