Recession,terms of trade,and immigrants

The current literature does not adequately analyze how economic crisis affects employment of immigrants in host countries. It is generally believed that immigrants lose jobs and return home during recession. We show that recession may instead help relatively unskilled immigrants when it leads to terms-of-trade improvement in the host country, and when the unskilled sector is protected by minimum wage regulations. We also derive the condition under which the income gap between natives and immigrants falls.