Εμπειρικά Υποδείγματα Γενικής Ισορροπίας

Impact of Illegal Immigration on the Greek economy

Closure rules The behaviour of AGE models does not depend so much on their detail concerning sectors and institutions, but on what is known as their “closure rules”. These are basically the assumptions concerning the macro behaviour of the economy, and refer to what macro variables are endogenous or exogenous. There are three types of macroeconomically important rules in AGE models of the type utilised here. The way the labour markets adjust. The way investment is modelled, and The way the external sector adjusts. There is a fourth type of closure, namely monetary adjustment rules, but these are irrelevant here as money is not explicitly included in the model.

Closure for the model In this model labour market adjusts neoclassically, ie employment is fixed and wages adjust. The investment closure is Keynesian, ie investment functions are specified. The external sector adjusts by assuming fixed foreign exchange inflows (variable exchange rate) Illegal immigration is assumed to augment the supplies of agricultural labour and non-agricultural unskilled labour. Illegal worker wages are lower by fixed margins than those of regular workers. Assume that illegal worker budget shares are the same as those of the poorest Greek households. Assume that illegals remit a fixed share of their income abroad.

Scenaria simulated Basic scenario. Illegals 31% of hired agricultural labour, 12.2% of non-agricultural unskilled labour. Total influx of illegals equivalent to 130000 man years of labour. Illegals earn wage 40% lower than that of similarly employed Greeks. Elasticity of labour supply with respect to real wage is 0.2 Scenario 1. Elasticity of labour supply increased to 0.4 Scenario 2. Elasticities of labour demand increased by factor of 2 Scenario 3. Assumes that wage differenjtial between Greeks and illegals is 0 rather than 0.4 (all other parameters at base values) Scenario 4. Proportion of income remitted by illegals is set at half its base case value of 0.5. No major changes if values of elasticities of substitution and transformation changed. Scenario 5. Base case but with nominal wage of all types of salaried labour set at fixed base case values.

Table 1. Macroeconomic Impact on the Greek Economy of the Influx of Illegal Aliens.

Table 2. Impact of the Influx of Illegal Aliens on Sectoral Production of the Greek Economy

Table 3. Impact of the Influx of Illegal Aliens on Real Disposable Incomes of Greek Households. Categories of hhlds that lose are 26.5% of all Greek hhlds or 37.1% of the Greek population