Reducing the inflow of unskilled foreign workers

Abstract

This paper investigates the effects of minimum wages on the inflow of unskilled foreign workers in a two-country macroeconomic model. We assume that all workers are unskilled and workers move from a country of lower expected real-consumption wages to a country of higher ones. This paper shows that, in cases where minimum wages are not introduced, workers move from a country with a larger domestic labor force to a country with a smaller one. If minimum wages are introduced into a country with a smaller domestic labor force, such migration can probably be reduced.