Migration and Diversity: Human versus Social Capital
AbstractThis paper examines the welfare implications associated with different degrees of diversity or similarity between migrants and natives under both migration and trade. We use a general equilibrium model of migration, human capital and social capital and find that there are three equilibrium solutions: an internal one with half the population of each country migrating to the other country, and two corner solutions where everyone ends up in one of the two countries. The internal solution is unstable and is unlikely to be reached under different levels of human capital across the two countries. The corner solutions are stable and will be reached under most circumstances. If there are human capital differences across the two populations, everyone ends up in the country with the highest initial level of human capital. Welfare under any of the equilibrium solutions rises with the diversity in human capital and decreases with the diversity in social capital between migrants and natives. Trade and both migration solutions reduce inequality between the populations of the two countries by the same amount. In addition, trade and migration are not equivalent if social capital is present: the highest welfare is obtained with migration under the corner solution, the second highest welfare is obtained with trade, and the lowest welfare is obtained with migration under the internal solution. The first two solutions (third solution) raise (may raise or reduce) welfare relative to the no-migration case.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1279.
Length: 25 pages
Date of creation: Sep 2004
Date of revision:
Publication status: published in: Review of International Economics, 2013, 21 (2), 281–294
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Other versions of this item:
- Vlad Manole & Maurice Schiff, 2013. "Migration and Diversity: Human versus Social Capital," Review of International Economics, Wiley Blackwell, vol. 21(2), pages 281-294, 05.
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
This paper has been announced in the following NEP Reports:
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.:
- Edward P. Lazear, 1999.
"Culture and Language,"
Journal of Political Economy,
University of Chicago Press, vol. 107(S6), pages S95-S126, December.
- Scheinkman, Jose A. & Soutter, Christine L. & Glaeser, Edward Ludwig & Laibson, David I., 2000.
4481497, Harvard University Department of Economics.
- Thomas Bauer & Astrid Kunze, 2003.
"The Demand for High-skilled Worker and Immigration Policy,"
RWI Discussion Papers
0011, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
- Thomas K. Bauer & Astrid Kunze, 2004. "The demand for high-skilled workers and immigration policy," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 47(1), pages 77-88.
- Bauer, Thomas K. & Kunze, Astrid, 2004. "The Demand for High-Skilled Workers and Immigration Policy," IZA Discussion Papers 999, Institute for the Study of Labor (IZA).
- Bauer, Thomas & Kunze, Astrid, 2004. "The Demand for High-Skilled Workers and Immigration Policy," CEPR Discussion Papers 4274, C.E.P.R. Discussion Papers.
- Schiff, Maurice, 2004. "When Migrants Overstay Their Legal Welcome: A Proposed Solution to the Guest-Worker Program," IZA Discussion Papers 1401, Institute for the Study of Labor (IZA).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.