Self-Interested Governments, Labor Unions, and Immigration Policy
نویسنده
چکیده
This paper constructs a political equilibrium in which firms and unions bargain over wages and workers and capitalists lobby the government for taxation, labor market regulation and immigration policy. The main findings are the following. It is in the native workers’ interests to ban firms’ direct recruitment from abroad. Otherwise, the ruling elite captures the surplus of the labor unions by threatening to allow such recruitment. Legal and illegal immigration coexist and do not undermine union bargaining power. Because native workers prefer illegal to legal immigration in lobbying, the government tolerates a higher public-sector marginal cost for illegal than legal immigrants. Journal of Economic Literature: D72, D73, J51, J61
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