Macroeconomic and sectoral effects of labor immigration: application of CGE model

The immigration of educated and skilled people from less developed to industrial countries, have always harmful effects on economy, science, culture and society of less developed countries. For this reason, the problem of immigration, attract more attention of policy makers and leads to impose the variety of policies in order to attract and keep labor in the country. Islamic Republic of Iran has not been exceptional from this problem in past decades. Of course, continuing the process of immigration is contradictory to the government policies, so achieving to the desired economic growth will be difficult. Therefore, considering the importance of effects of immigration, this study investigates macroeconomic and sectoral effects of labor immigration, applying a Computable General Equilibrium (CGE) model. Following this objective, two scenario of increase in skilled and unskilled labor immigration were defined. The results showed that both skilled and unskilled labor immigration, lead to reduction in economic growth, investment and capital return. This also reduces the production of various economic sectors. On the other hand, more immigration in skilled labor leads to more wages of labor, and in contrast, less prices of capital including physical, natural resources and land. Furthermore, increase in skilled labor immigration causes production factors of agriculture and industry demand to decline, and according to possibility of production factors substitution, this leads to capital and unskilled labor transfer in the service sector.