ABSTRACT
Economic theory is used to analyze the decision to emigrate and the labor-market effects of immigration. This chapter examines how immigrants are likely to differ from others in personal characteristics, and what factors influence whether immigration raises the per capita real income of the native-born in the host country. It analyses the causes and consequences of worker mobility, the larger category of which immigration is an important subset. Worker mobility plays a critical role in market economies. Because the purpose of any market is to promote voluntary exchange, society relies on the free movement of workers among employers to allocate labor in a way that achieves maximum satisfaction for both workers and consumers. Mobility of workers among countries, and among regions within a country, is an important fact of economic life. Human-capital theory predicts that migration will flow from areas of relatively poor earnings possibilities to places where opportunities are better.
