Growth and Welfare Effects of World Migration
University of Surrey - Department of Economics; Centre for Economic Policy Research (CEPR)
University of Surrey - Department of Economics
London Metropolitan University - Department of Economics, Finance and International Business (EFIB)
Richard G. Pierse
University of Surrey - Department of Economics; National Institute of Economic and Social Research (NIESR)
Scottish Journal of Political Economy, Vol. 57, Issue 5, pp. 615-643, November 2010
Using a two-bloc endogenous growth model calibrated to two generic sending and receiving countries of equal size, we assess the growth and welfare impact of world migration flows of different skill compositions. The sending country (East) has a lower total factor productivity and a lower endowment of skilled labour. Migration can induce two growth-enhancing effects: an efficiency effect from the more efficient use of labour in the receiving country (West) and a sectoral reallocation effect from a fall in the host country skilled–unskilled wage rates. Despite growth gains, there are both winners (migrants, the representative Western non-migrant household) and losers (the representative Eastern household remaining). Remittances can see the latter group joining the winners.
Number of Pages in PDF File: 29
Date posted: September 7, 2010
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