Factor Mobility and Income Growth: Two Convergence Hypotheses

34 Pages Posted: 14 Jul 2000 Last revised: 19 Aug 2010

See all articles by Assaf Razin

Assaf Razin

Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Chi-Wa Yuen

The University of Hong Kong - School of Economics and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: May 1995

Abstract

While technologies and policy fundamentals are presumably different internationally, inducing differences in growth rates, capital mobility is shown to be a powerful force in achieving complete growth rate equalization across countries. We provide evidence in support of this effect, showing that restrictions on capital flows tend to make individual country growth rates more divergent. In the context of regional growth, however, labor mobility is shown to be capable of generating income level equalization across regions in the presence of knowledge spillovers. Some supporting evidence is found for this effect, showing that restrictions on labor flows tend to make individual region/country per capita income more divergent.

Suggested Citation

Razin, Assaf and Yuen, Chi-Wa, Factor Mobility and Income Growth: Two Convergence Hypotheses (May 1995). NBER Working Paper No. w5135. Available at SSRN: https://ssrn.com/abstract=225200

Assaf Razin (Contact Author)

Tel Aviv University - Eitan Berglas School of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for Economic Policy Research (CEPR)

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Chi-Wa Yuen

The University of Hong Kong - School of Economics and Finance ( email )

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23 Belcher's Street
Kennedy Town
Hong Kong
+8 52 2859 1051 (Phone)
+8 52 7548 1152 (Fax)

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