Download This PaperHow Does Labor Mobility Affect Income Convergence?
FRB of Kansas City Working Paper No. 99-12
40 Pages Posted: 10 Feb 2000
There are 2 versions of this paper
How Does Labor Mobility Affect Income Convergence?
Date Written: July 2000
Abstract
The neoclassical growth model is extended to allow for mobile labor. Following a negative shock to a small economy's capital stock, capital and labor frictions effect an equilibrium transition path during which wages remain below their steady-state level. Outmigration directly contributes to faster income convergence but also creates a disincentive for gross capital formation. The net result is that across a wide range of calibrations, the speed of income convergence is relatively insensitive to the degree of labor mobility.
JEL Classification: F43, J61, O41
Suggested Citation: Suggested Citation
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