OPTIMAL IMMIGRATION, EDUCATION AND GROWTH IN THE LONG-RUN

The paper extends Manning's model on education and balanced growth to include labour immigration. Each immigration unit is assumed to consis t of one skilled worker and some unskilled members. The optimal immigr ation policy which maximizes the per capita steady-state consumption o f the host country is derived. We show that optimal immigration policy can reduce the steady-state skilled labour ratio. More interesting st ill, contrary to the widespread belief that immigration of skilled wor kers hurts local skilled workers, it is the unskilled local workers wh ose interests are threatened by optimal immigration policy.