The theory of factor demand has important implications for the study of the impact of
immigration on wages in both sending and receiving countries. This paper examines the
implications of the theory in the context of a general equilibrium model where the wage
impact of immigration is influenced by such factors as the elasticity of product demand, the
rate at which the consumer base expands as immigrants enter the country, the elasticity of
supply of capital, and the elasticity of substitution across inputs of production. The analysis
reveals that the shortrun wage effect of immigration is negative in a wide array of possible
scenarios, and that even the long run effect of immigration may be negative if the impact of
immigration on the potential size of the consumer base is smaller than its impact on the
size of the workforce. The constraints imposed by the theory can be used to check the
plausibility of the many contradictory claims that appear throughout the immigration
literature.