A Cross-Country Analysis of the Roles of Border Openness, Human Capital and Legal Institutions in Explaining Economic Development
20 Pages Posted: 24 Apr 2020
Date Written: March 30, 2020
This paper studies the income effect of three specific policy variables: border openness to migration, accumulation of human capital, represented by the education level of the adult population, and the strength of legal institutions, captured by the confidence of a country's citizens to abide by its laws. Using cross-country data covering all regions of the world, and employing instrumental variables for migration, education, and law, we establish that all three policy measures have a robust, positive, and strong association with income. This paper then considers whether there are any germane complementarities between migration, education, and law in explaining income per capita. Our findings show that the effect of improving the education outcomes of countries on their economic performance appears to be similar, regardless on their levels of immigration and law, but that the income effects of border openness and legal institutions can be substantially raised with appropriate institutional and educational policy reforms.
Keywords: migration, human capital, institutions, policy complementarity, economic development
JEL Classification: E61, F22, I25, O43
Suggested Citation: Suggested Citation