The short- and longer-term regional consequences of migration for European aggregate supply are examined in a simple model in which human capital enters the production function externally. The planner chooses a reallocation of population across East and West that cannot be replicated by the market without taxes or subsidies. The market solution in this model with free migration is always associated with an efficiency loss and might lead to the `Mezzogiorno syndrome' in the East.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
614.
Find related papers by JEL classification: F22 - International Economics - - International Factor Movements and International Business - - - International Migration J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
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