In the aftermath of the eastern enlargement of the EU, Norway experienced one of the largest immigration shocks of the 21st century. This column uses data from the episode to examine the general equilibrium response of wages, labour costs, and industry employment to such shocks. One finding is that although real wages in some occupations decline, the aggregate welfare effects on natives are close to zero as natives switch to higher-wage occupations. The welfare effect on the existing population of immigrants, on the other hand, is negative as they have a comparative advantage in low-wage occupations.
Bernt Bratsberg, Andreas Moxnes, Oddbjørn Raaum, Karen-Helene Ulltveit-Moe