Does High Inequality Attract High Skilled Immigrants?

37 Pages Posted: 10 Jun 2016

See all articles by Eric D. Gould

Eric D. Gould

Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Omer Moav

University of Warwick - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: June 2016

Abstract

This study examines how the sources and levels of income inequality affect how a country attracts and retains high skilled workers. With parameter values that yield realistic levels of emigration, our model shows that emigration rates increase with education when the returns to education are higher abroad. However, the relationship between unobservable skills (‘residual wages’) and emigration can display an inverse U‐shaped pattern, if unobservable skills are composed of both ‘general’ and ‘country‐specific’ skills. Using data on Israeli emigrants before they decide to emigrate, we find strong empirical evidence in support of the model’s predictions.

Suggested Citation

Gould, Eric D. and Moav, Omer, Does High Inequality Attract High Skilled Immigrants? (June 2016). The Economic Journal, Vol. 126, Issue 593, pp. 1055-1091, 2016. Available at SSRN: https://ssrn.com/abstract=2793580 or http://dx.doi.org/10.1111/ecoj.12185

Eric D. Gould (Contact Author)

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel
+972 2 588 3247 (Phone)
+972 2 581 6071 (Fax)

HOME PAGE: https://sites.google.com/site/edgould

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Omer Moav

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

HOME PAGE: http://www2.warwick.ac.uk/fac/soc/economics/staff/academic/moav

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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