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How Does Labor Mobility Affect Income Convergence?

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  • Jordan M. Rappaport

    (Federal Reserve Bank of Kansas City)

Abstract

The neoclassical growth model is extended to allow for mobile labor. Following a negative shock to a small economy's capital stock, capital and labor frictions effect an equilibrium transition path during which wages remain below their steady-state level. Outmigration directly contributes to faster income convergence but also creates a disincentive for gross capital formation. The net result is that across a wide range of calibrations, the speed of income convergence is relatively insensitive to the degree of labor mobility.

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 0124.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:0124

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  1. Jordan Rappaport, 1999. "Local Growth Theory," CID Working Papers 19, Center for International Development at Harvard University.
  2. Jordan Rappaport, 1999. "How does labor mobility affect income convergence?," Research Working Paper 99-12, Federal Reserve Bank of Kansas City.
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  12. Jordan Rappaport, 2000. "How does openness to capital flows affect growth?," Research Working Paper RWP 00-11, Federal Reserve Bank of Kansas City.
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  27. Jordan Rappaport, 1999. "Why are population flows so persistent?," Research Working Paper 99-13, Federal Reserve Bank of Kansas City.
  28. Mueser Peter R. & Graves Philip E., 1995. "Examining the Role of Economic Opportunity and Amenities in Explaining Population Redistribution," Journal of Urban Economics, Elsevier, vol. 37(2), pages 176-200, March.
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