Factor Mobility and Income Growth: Two Convergence Hypotheses
REVIEW OF DEVELOPMENT ECONOMICS
Posted: 24 Mar 1997
While technologies and policy fundamentals are presumably different internationally, inducing differences in growth rates, capital mobility can be a powerful force in equalizing output growth rates across countries. We provide some indirect evidence in support of this effect. In the context of regional growth, however, labor mobility can equalize income levels across regions in the presence of human capital externalities. Supporting evidence is found for this effect, revealing that restrictions on labor flows tend to make per capita incomes more divergent across nations and/or regions.
JEL Classification: F2, F4, O4
Suggested Citation: Suggested Citation