Within this multi-good setting conventional notions of substitutability are not useful in explaining the relation between immigration and native wages. I construct a model in which unskilled workers become skilled at a cost that varies across individuals. The number becoming skilled depends on the relative wage, itself determined in this general equilibrium setting simultaneously with output prices. Thus, the resulting supplies of skilled and unskilled workers are endogenous. Unskilled immigrants can not become skilled, and for this reason differ from unskilled natives.
Results generally support the predictions of the model.
An analysis focusing exclusively on the apparel industry yields similar results. This dissertation suggests that skilled natives benefit from the factor price changes induced by unskilled immigration. Rather than restricting unskilled immigration, government policy could focus on helping natives become skilled so that they benefit from such an influx. Previous Literature and the Theoretical Setting 2.1 Background 2.2 Labor Theory Based Literature 2.3 Trade Theory Based Approach 3. 3.4 Alternative Interpretations of an Empirical Regularity 4.