Technological Change and Immigration Policy

We propose a dynamic general equilibrium model to address the effects of technological progress on immigrant skill composition. Our results from this positive model suggest that neutral and skill-biased technological change imply essentially different immigration policies. On the one hand, skill-neutral change implies an immigrant skill distribution that is dominated by the native skill distribution; on the other hand, skill-biased change implies an immigrant over-representation at the top and bottom of the skill distribution. This result is interesting because of its unexpected nature. It implies that if technology changes as it has in the last decades and education has an increasing cost, then it is optimal to allow some low-skill immigration along with high-skill immigration. We show consistency of our model's predictions with data from the United States and Canada.