associated parameters) that a¤ect the conclusions of our exercise. We start with a preferred (usually average) set of parameter values and we present the results as the benchmark case. Next, we consider for each parameter a range of values deemed reasonable by the literature and we discuss how robust our results are to these variations.

The ...rst component of our model assumes that aggregate labor is combined with physical capital to produce output. While capital may take some time to adjust to changes in the labor supply, we assume that it adjusts in the long run to maintain constant the capitaloutput ratio (and hence its rate of return). Such property may be derived from a classic or neoclassic growth model (such as Solow 1956, Ramsey 1928) in the case of a closed economy or alternatively from the assumption of an open economy. Most of our simulated wage e¤ects should be understood as long-run e¤ects<sup>3</sup> .

In the second building block of the model, we combine labor of highly educated and less educated workers in a function with constant elasticity of substitution. This representation is common in labor markets studies (such as Katz and Murphy, 1992, Card and Lemieux, 2001) and in cross-country analysis of relative productivity (Caselli and Coleman, 2006). Following the literature, we choose college graduates as the highly educated portion of the labor force and we pick a range between 1.3 and 2 for the elasticity of substitution which spans most labor market studies including Angrist (1995), Borjas and Katz (2007) and Katz and Murphy (1992).

The third ingredient of our model is that immigrants and natives within the same skill/education category are allowed to be imperfect substitutes within a CES structure. There is debate in the literature on the estimates of the elasticity of substitution between natives and immigrants. Borjas et al (2008) put it essentially at in...nity, Ottaviano and Peri (forthcoming) and Card (2009) put it around 20 and Manacorda et al. (forthcoming) put it around 6. We will analyze the wage impact of immigration and emigration on natives using each one of these parameter values. We describe the sensitivity of simulated average wages and the distributional e¤ects for non-migrant natives with di¤erent education levels to di¤erent assumptions about this elasticity.

Finally, the fourth ingredient of the model is to allow human capital (skill) intensity to have a productivity externality as immigration and emigration alter the skill composition in an economy (i.e. the ratio of highly educated to the less educated). There is some debate in the literature on this issue as well. Moretti (2004a and 2004b), based on data from the US cities, puts the elasticity of productivity to the share of college educated between 0.75 and 1. On the opposite end of the spectrum, Acemoglu and Angrist (2001) estimate essentially no productivity e¤ect of increased schooling in US states. Iranzo and Peri (2009) estimate an externality around 0.44 using US state level data. Again, we analyze the impact of immigration, emigration and net migration under each of these parameter values.

While the speci...c quantitative details of the simulations vary with the choice of parameter values, some general results emerge from this exercise. First, in general, over the period 1990-2000 immigration had zero to small positive long-run e¤ect on the average wages of non-migrant natives in the rich OECD countries (Western Europe plus the US, Canada,

> 3In section 5.5 by making assumptions on how the total migration ‡ows are distributed over the years, and on the short-run speed of adjustment of capital we can calculate the short-run average wage e¤ects accounting, that is, for the sluggish adjustment of capital.

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