Australia). Using the estimates for the average values of the parameters, this positive effect ranges from zero in Italy to +1.7% in Australia. Second, over the period 1990-2000, emigration had a mild to signi...cant negative long-run e¤ect on the wages of non-migrants. Still focusing on rich OECD countries, the e¤ects range from 0 for the US (due to the near absence of emigration) to -0.8% in the UK and -0.7% in Portugal. Third, over the period 1990-2000, immigration generally improved the income distribution of European countries while emigration worsened it by increasing the wage gap between the high and low skilled natives.

All three results go counter to the popular beliefs about migration, but they are a result of the nature of migrant ‡ows from 1990 to 2000. European countries (along with the US, Canada, Australia) have experienced both immigration and emigration that were usually more skill intensive than (or as skill intensive as) their domestic labor forces. Under these conditions, in the long run, immigration is associated with average wage gains and emigration with average wage losses for non-migrant natives unless there is no externality of human capital and migrants are perfectly substitutable with natives. In this latter case, both immigration and emigration have no e¤ect on the average wages of non-migrant natives.

The skill composition of migrants relative to non-migrants is crucial in determining our average wage results. We attempt to correct the "e¤ective" skills of migrants to account for certain important phenomena which might not be fully re‡ected in our aggregate statistics. First, we use estimates of the extent of illegal immigration into the main Western European countries to correct for the in‡ows of migrants into Europe. Second, we account for the potential lower quality of schooling for migrants who completed their education in their home countries or for the "downgrading" of their skills in the host countries’labor market. Both corrections reduce the e¤ective percentage of highly skilled immigrants. While the corrections make some di¤erence, the general picture described above remains unchanged.

We consider two other extensions. First, we introduce the possibility of crowding e¤ects of immigrants on productivity due to the presence of a ...xed factor or the presence of a positive density externality, such as in Ciccone and Hall (1996), on productivity. While their presence either attenuates or increases slightly the e¤ects but leaves the basic results unchanged. Second, we account for the short-run impact of immigrants by including in the simulations sluggish capital adjustment. We distribute net immigration into yearly ‡ows of immigrants and assume a speed of adjustment of capital that is consistent with estimates from the macro literature. While such sluggish adjustment generates a small negative contribution to average wages in the short run, the overall short-run e¤ects of immigration are still positives in four of the ten considered European countries. When negative, these short-run e¤ects are very small, with the largest negative impact achieved in Spain in the order of -0.35%. Emigration turns out still to exert a negative wage e¤ect on non-movers in the short run and usually larger, in absolute value, than the e¤ect of immigration.

The rest of the paper is organized as follows. Section 2 presents the simple aggregate production framework from which we derive wages as marginal productivity of di¤erent types of workers. Section 3 describes the data, their construction and their sources and shows some simple summary statistics about the educational structure of labor force data and migrant data. Section 4 presents the basic results of the simulated wage e¤ects of immigrants using our model and the range of parameters available from the literature. Section 5 considers the wage e¤ect when accounting for undocumented workers, for schooling quality di¤erences, 4