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Immigration and Economic Growth: Do Origin and Destination Matter?

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  • Kang, Young ho
  • Kim, Byung Yeon

Abstract

This paper assesses the heterogeneous effects of immigration on economic growth depending on both the origin and the destination countries. Following the development of a simple growth model augmented by the embodied human capital of immigrants, we estimate the growth equation using both a gravity-style instrument variable approach and the dynamic system-GMM estimator. We find that immigration from developed economies positively affects the economic growth of the host countries. Furthermore, the growth-enhancing effect of immigration is significantly larger when immigration flows from developed to developing economies than when it does to those that include both developed and developing economies. We interpret these results as evidence of immigrants from developed countries bringing with them - upon entry - their advanced knowledge on technology and institutions into the developing countries that host them.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/23258/1/wp2012-1.pdf
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Bibliographic Info

Paper provided by Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University in its series CEI Working Paper Series with number 2012-01.

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Length: 30, 13 p.
Date of creation: Jul 2012
Date of revision:
Handle: RePEc:hit:hitcei:2012-01

Note: July 2012
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Keywords: Immigration; economic growth; human capital; institutions;

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  1. Francesc Ortega & Giovanni Peri, 2009. "The Causes and Effects of International Migrations: Evidence from OECD Countries 1980-2005," NBER Working Papers 14833, National Bureau of Economic Research, Inc.
  2. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  3. Bellini, Elena & Ottaviano, Gianmarco I. P. & Pinelli, Dino & Prarolo, Giovanni, 2008. "Cultural diversity and economic performance: Evidence from European regions," HWWI Research Papers 3-14, Hamburg Institute of International Economics (HWWI).
  4. Gianluca OREFICE, 2010. "Skilled Migration and Economic Performances: evidence from OECD countries," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2010015, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  5. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  6. Bowsher, Clive G., 2002. "On testing overidentifying restrictions in dynamic panel data models," Economics Letters, Elsevier, vol. 77(2), pages 211-220, October.
  7. Berthélemy, Jean-Claude & Beuran, Monica & Maurel, Mathilde, 2009. "Aid and Migration: Substitutes or Complements?," World Development, Elsevier, vol. 37(10), pages 1589-1599, October.
  8. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
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