Research

Working Papers/ Work in Progress

    This paper studies the macroeconomic general equilibrium effects of skilled immigration policy changes by explicitly taking into account the role of firm demand for foreign skilled labor. To this end, I develop a two-sector dynamic stochastic general equilibrium model with monopolistically competitive firms and heterogeneous workers. Unlike most previous studies that view immigration as a supply-induced shock, the paper models skilled labor immigration as an endogenous response to an increase in firm labor demand in the receiving economy. The model is calibrated to mimic the U.S. economy with its current immigration policy: Firms face hiring costs and there is an occasionally binding cap on the foreign skilled workers that can be hired each period. The results indicate that a less restrictive skilled immigration policy via an immigration cap increase leads to heterogeneous effects on skilled and unskilled workers --- unskilled domestic workers gain but skilled domestic workers lose. However, the magnitude of the welfare impacts depends on the state of the economy at the time of the cap change and also on the structure of the labor market (presence of search frictions). This paper also evaluates the welfare and efficiency gain from moving toward an alternate skilled immigration policy with a market-driven allocation of permits for hiring skilled foreign workers. Such a policy increases welfare and brings the economy's allocation closer to the social planner's first-best allocation.

Skilled Immigration, Offshoring, and Trade (with Daisoon Kim and Raghav Paul) [New Draft Coming Soon] 

This paper studies the impact of skilled immigration policy changes on  offshore labor hiring by firms in the skill-intensive services sector. Empirical literature documents substitutability between immigrant and offshore labor, which indicates that a stricter immigration policy should increase offshoring by firms. Our goal is to quantify the importance of firms' adjustment in offshore hiring when evaluating the welfare impacts of skilled immigration policy changes. To this end, we build a two-country, two-sector model with skilled immigration, offshore labor hiring, and trade in intermediate inputs. We calibrate the main parameters in the Home country that pertain to immigration policy, labor markets, trade and offshoring costs to match the U.S. economy during the 2004 - 2015 period. The results indicate that if we ignore firms' adjustment in offshore labor hiring following a 10 percent immigration cap reduction, we would over estimate the  welfare gain to domestic skilled households by 52 percent.

An Estimated Model of High-Skilled Migration with Search and Matching Frictions (with Federico Mandelman) (In Progress)
Policy Reports/Book Chapters
  • "Upgrading in the Indian garment industry: a study of three clusters" (with Saon Ray and Prithvijit Mukherjee), Asian Development Bank Economics Working Paper Series No. 43, April 2016. Available at SSRN: (link)

  • "Normalizing India-Pakistan Trade" (with Taneja et al.), in India Pakistan Trade: Strengthening Economic Relations (pp. 13-45), Springer, August 2014

  • "India-Pakistan: Trade Perception Survey" (with Taneja et al.), in India-Pakistan Trade: Strengthening Economic Relations (pp. 71-126), Springer, August 2014

Departmment of Economics, Grinnell College, Grinnell, IA 50112