Differential Migration Prospects, Skill Formation, and Welfare

17 Pages Posted: 24 Aug 2012

See all articles by Oded Stark

Oded Stark

University of Bonn; University of Warsaw; University of Tuebingen; Georgetown University

Roman Zakharenko

National Research University Higher School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 2012

Abstract

This paper develops a one sector, two‐input model with endogenous human capital formation. The two inputs are two types of skilled labor: “engineering,” which exerts a positive externality on total factor productivity, and “law,” which does not. The paper shows that a marginal prospect of migration by engineers increases human capital accumulation of both types of workers (engineers and lawyers), and also the number of engineers who remain in the country. These two effects are socially desirable, since they move the economy from the (inefficient) free‐market equilibrium towards the social optimum. The paper also shows that if the externality effect of engineering is sufficiently powerful, everyone will be better off as a consequence of the said prospect of migration, including the engineers who lose the migration “lottery,” and even the individuals who practice law.

Suggested Citation

Stark, Oded and Zakharenko, Roman, Differential Migration Prospects, Skill Formation, and Welfare (September 2012). Review of International Economics, Vol. 20, Issue 4, pp. 657-673, 2012. Available at SSRN: https://ssrn.com/abstract=2135361 or http://dx.doi.org/10.1111/j.1467-9396.2012.01045.x

Oded Stark (Contact Author)

University of Bonn ( email )

Walter-Flex-Str. 3
Bonn, NRW 53113
Germany

University of Warsaw ( email )

Dluga Street 44/50
Warsaw, 00-241
Poland

University of Tuebingen

Wilhelmstr. 19
Tuebingen, Baden Wuerttemberg 72074
Germany

Georgetown University ( email )

Washington, DC 20057
United States

Roman Zakharenko

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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