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How does labor mobility affect income convergence?

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Author Info
Jordan Rappaport

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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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Paper provided by Federal Reserve Bank of Kansas City in its series Research Working Paper with number 99-12.

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Date of creation: 1999
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Handle: RePEc:fip:fedkrw:99-12

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Keywords: Labor mobility Emigration and immigration Income

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Rappaport, J., 2000. "Local Growth Empirics," Papers 23, Chicago - Graduate School of Business.
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  2. Abel, Andrew B., 1982. "Dynamic effects of permanent and temporary tax policies in a q model of investment," Journal of Monetary Economics, Elsevier, vol. 9(3), pages 353-373. [Downloadable!] (restricted)
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  4. repec:att:wimass:1919983 is not listed on IDEAS
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  6. Joshua Hojvat Gallin, 1999. "Net migration and state labor market dynamics," Finance and Economics Discussion Series 1999-16, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  7. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-71, October. [Downloadable!] (restricted)
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  8. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1991-1), pages 107-182. [Downloadable!]
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  9. King, Robert G & Rebelo, Sergio T, 1993. "Transitional Dynamics and Economic Growth in the Neoclassical Model," American Economic Review, American Economic Association, vol. 83(4), pages 908-31, September. [Downloadable!] (restricted)
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  10. Jordan Rappaport, 2000. "How does openness to capital flows affect growth?," Research Working Paper RWP 00-11, Federal Reserve Bank of Kansas City. [Downloadable!]
  11. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
  12. Jordan Rappaport, 1999. "Local Growth Theory," CID Working Papers 19, Center for International Development at Harvard University. [Downloadable!]
  13. Steven N. Durlauf & Danny T. Quah, 1998. "The New Empirics of Economic Growth," Working Papers 98-01-012, Santa Fe Institute.
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  14. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1992-1), pages 1-76. [Downloadable!]
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  17. Eicher, Theo S & Turnovsky, Stephen J, 1999. " Convergence in a Two-Sector Nonscale Growth Model," Journal of Economic Growth, Springer, vol. 4(4), pages 413-28, December. [Downloadable!] (restricted)
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  19. Jordan Rappaport, 1999. "Why are population flows so persistent?," Research Working Paper 99-13, Federal Reserve Bank of Kansas City. [Downloadable!]
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  20. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation, Yale University. [Downloadable!]
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  22. Gyourko, Joseph & Tracy, Joseph, 1989. "The Importance of Local Fiscal Conditions in Analyzing Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1208-31, October. [Downloadable!] (restricted)
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  23. Evans, Paul & Karras, Georgios, 1996. "Convergence revisited," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 249-265, April. [Downloadable!] (restricted)
  24. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November. [Downloadable!] (restricted)
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  26. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December. [Downloadable!] (restricted)
  27. 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. [Downloadable!] (restricted)
  28. Hayashi, Fumio, 1982. "Tobin's Marginal q and Average q: A Neoclassical Interpretation," Econometrica, Econometric Society, vol. 50(1), pages 213-24, January. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Chris Papageorgiou & Fidel Pérez Sebastián, 2005. "Is The Speed Of Convergence A Good Proxy For The Transitional Growth Path?," Working Papers. Serie AD 2005-33, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
    Other versions:
  2. Sirin Saracoglu & Murat G. Kirdar, 2006. "Does Internal Migration Lead to Faster Regional Convergence in Turkey? an Empirical Investigation," ERSA conference papers ersa06p784, European Regional Science Association. [Downloadable!]
  3. Harry P. Bowen & Haris Munandar & Jean-Marie Viaene, 2005. "The Limiting Distribution of Production in Integrated Economies: Evidence from US States and EU Countries," Tinbergen Institute Discussion Papers 05-045/2, Tinbergen Institute, revised 01 2006. [Downloadable!]
  4. Jordan Rappaport, 1999. "Why are population flows so persistent?," Research Working Paper 99-13, Federal Reserve Bank of Kansas City. [Downloadable!]
    Other versions:
  5. Céline Rochon & Geneviève Verdier & Leslie Lipschitz, 2008. "A Real Model of Transitional Growth and Competitiveness in China," IMF Working Papers 08/99, International Monetary Fund. [Downloadable!]
  6. Matthew Higgins & Daniel Levy & Andrew Young, 2005. "Growth and Convergence across the US: Evidence from County-Level Data," Macroeconomics 0505009, EconWPA. [Downloadable!]
    Other versions:
  7. Young, Andrew & Higgins, Matthew & Levy, Daniel, 2006. "Heterogeneous Convergence," MPRA Paper 954, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  8. Jordan Rappaport, 2000. "Is the speed of convergence constant?," Research Working Paper RWP 00-10, Federal Reserve Bank of Kansas City. [Downloadable!]
  9. David C Maré & Wai Kin Choy, 2001. "Regional Labour Market Adjustment and the Movements of People: A Review," Treasury Working Paper Series 01/08, New Zealand Treasury. [Downloadable!]
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