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Labor market integration and migration: impacts on skill formation and the wage structure

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  • BEHRENS, Kristian
  • SATO, Yasuhiro

Abstract

We analyze the impacts of labor market integration and migration on skill formation, wage structures, and per capita GDP of host and source countries. To do so, we propose a model in which heterogeneous agents invest in the acquisition of skills, and in which final good production exhibits increasing returns to scale in the range of available skills. Labor market integration, by allowing for migration in response to wage differentials, changes the wage structures and, therefore, the incentives to become skilled in both host and source countries. We show that our model can largely replicate the empirical evidence concerning international migration, the widening international income dispersion, the narrowing national income dispersion, and the divergence in the rates of skill formation in host and source countries.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2006001.

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Date of creation: 00 Feb 2006
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Handle: RePEc:cor:louvco:2006001

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Keywords: labor market integration; migration; skill heterogeneity; skill formation; income inequalities.;

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References

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Cited by:
  1. Ryusuke Ihara & Shizu Yamamoto, 2012. "Does labor diversity cause agglomeration in Japan?: an NEG approach with a covariance structure analysis," ERSA conference papers ersa12p430, European Regional Science Association.
  2. Ryusuke Ihara, 2011. "Agglomeration with the pros and cons of labor heterogeneity," ERSA conference papers ersa11p528, European Regional Science Association.

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