Is a Policy of Free Movement of Workers Sustainable?

In this paper, we study the costs and benefits of the adoption of a policy of free movement of workers. For countries to agree on uncontrolled movements of workers, short‐run costs must be outweighed by the long‐term benefits of better labor‐market flexibility and income smoothing. We show that such a policy is less likely to be adopted when workers are more impatient and less risk‐averse, when production technologies display stronger decreasing returns, and when countries trade a significant share of their products.

Keywords: Labor‐market flexibility, migration, sustainable plan

JEL Classification: F22, J61

Suggested Citation: Suggested Citation

Picard, Pierre M. and Worrall, Tim S., Is a Policy of Free Movement of Workers Sustainable? (October 2016). The Scandinavian Journal of Economics, Vol. 118, Issue 4, pp. 718-754, 2016, Available at SSRN: https://ssrn.com/abstract=2870829 or http://dx.doi.org/10.1111/sjoe.12163