ABSTRACT
The previous two chapters discussed how immigration affects the labor market in the destination country, specifically, how immigration affects the wages and employment of natives in theory and in practice. This chapter considers other effects of immigration on domestic markets. Immigration increases the number of consumers in the destination, which leads to higher demand for goods and services. In addition, immigration adds to the local labor supply and increases the supply of certain products in an area. These effects translate into competing effects on prices: an increase in demand will lead to higher prices, while an increase in supply will cause prices to fall.
