An immigrant is someone who migrates into a host country and an emigrant is someone who migrates out of their home country.

Moving to a different country involves monetary costs and benefits as well as less tangible costs and benefits that cause utility gains and losses.

Nonmonetary costs and benefits of moving include changes in the distance from family and friends, changes in recreation and leisure opportunities, as well as language.

Viewing the immigration decision using a simple cost verses benefit framework leads to several predictions about immigration.

• First, an improvement in earnings opportunities ill the host country increases the benefits to migration and raises the likelihood that someone immigrates.

• Periods of economic expansion in a host country are associated with increased immigration because earnings opportunities improve.

• Alternatively, when a home country has an expansion of jobs and other opportunities, the opportunity cost of migrating increases and fewer people emigrate.

• The relatively better earnings opportunities in the more developed regions of the world provide an incentive for immigrants to move there.

• Second, an increase in the monetary or other costs of moving reduces the likelihood of immigration.

  • All else being equal, a host country's immigrants are more likely to come from nearby countries because of the smaller costs of moving shorter distances.

• Third, individuals who are more financially secure and have more labor market skills are more likely to migrate than others, since having more wealth or access to money makes it easier to cover the costs of moving.

  • This does not mean that host countries do not attract relatively poor or low-skilled immigrants. Rather, those who immigrate are likely to have more access to wealth and resources than their non-immigrant counterparts.

• Finally, younger individuals are more likely to migrate than older individuals, as younger individuals will have more time to reap the benefits of immigration and recover the up-from costs of migrating.

Immigrants produce benefits for host countries in the form of increased output, tax revenues, and participation in the political process.

• Host countries also benefit from immigrant expertise and entrepreneurship.

• Immigrants are more likely to be business owners than natives with similar characteristics .

• At the same time, immigration imposes costs on some native workers and increases the demand for resources, public programs, and other goods and services in host countries.

Immigration causes an increase in the supply of labor in the host country. Whether native workers are better off or worse off from immigration depends on whether native workers are substitutes or complements to immigrant labor.

• We can use measures of consumer and producer surplus to measure the impacts of immigration on native workers and employers.

• Since employers are the buyers in the labor market, consumer surplus measures the net benefit that firms earn from hiring labor.

• Producer surplus is the net benefit that sellers earn from selling a good or service. As workers are the suppliers in tbe labor market, producer surplus measures the net benefit that workers gain from working.

• If immigrants are relatively low skilled, they are substitutes for other low-skilled native workers. If immigrants have high skill levels, they are substitutes for highly-skilled native workers.

The impacts of immigration on the labor market are different when immigrants and native workers are complements.

• In labor markets, native workers who are complements to immigrant workers have productivity and income gains from immigration.

• Complements to lower-skilled or non-English-speaking immigrants include skilled craftsmen, supervisors, and managers, as well as interpreters and employee trainers.

• Complements to highly skilled immigrants include lower-skilled native workers.

The impact of immigrants on local labor markets depends on whether immigrants are complements or substitutes for native workers, which in turn depends on the level of training and skills that immigrants bring to the labor market.

• Because the skills necessary to perform a job vary across occupations, economists tend to use educational attainment as a rough measure of a worker's skill level.

• Using this metric, low-skill workers are those without a high school diploma, high-skill workers are those with at least a college degree, and mid-skill workers are those with at least a high school diploma but less than a college degree.

• Low-skill immigrants make up large portions of the construction, grounds keeping, farm worker, and food service industries.

• High-skill immigrants make up large portions of the information technology, engineering, scientific research, and health care industries.

Immigration has impacts on product markets in both host and home countries because changes in the size of a population generate changes in the demand for goods and services.

• When immigrant populations increase, demand for the goods and services that immigrants boy increases.

• As a result, sales of those goods expand and the demand for workers to produce those goods and services rises.

The impacts of emigration on product markets in the home country mirror the impacts of immigration on product markets in the host country.

• Emigration causes a decrease the demand for goods and services in the home country.

• The decrease in demand causes a decline in the equilibrium price and quantity of goods and services sold in the home country.

• As sales of goods decrease, the demand for workers to produce those goods and services also falls.

Remittances are transfers of money to home countries by workers who have emigrated. In many developing countries, remittances are an important source of income for emigrants' family members who remain in the home country. Because they raise people's incomes, remittances generate increases in the demand for normal goods and services in the home country.

Outsourcing occurs when someone hires another person or firm to produce a good or service.

Offshoring is the movement of a firm's production from one country to another.