Why Don’t Labor and Capital Flow Between Young and Old Countries?
AbstractIn this paper we investigate the twofold effect of demographics on international factor flows in a model with endogenous policy constraints on both foreign direct investment and migration. Factor price differences between industrialized and developing countries create economic incentives for migration to developed countries and for capital flows to less developed countries. However, political barriers to immigration in developed countries and expropriation risks in developing countries impede labor and capital flows. Using a political economy approach that takes into account different generations’ conflicting attitudes towards immigration and expropriation, we explore how these policy restrictions interact. We find that, in the presence of mobility constraints, larger demographic differences between countries need not result in an increase of factor flows.
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Bibliographic InfoPaper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 200942.
Length: 27 pages
Date of creation: 2009
Date of revision:
Publication status: Forthcoming in
Demographic Change; Political Economy; Migration; Foreign Direct Investment;
Other versions of this item:
- an de Meulen, Philipp & Calahorrano, Lena, 2009. "Why Don't Labor and Capital Flow Between Young and Old Countries?," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 21, Verein für Socialpolitik, Research Committee Development Economics.
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- J10 - Labor and Demographic Economics - - Demographic Economics - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-07 (All new papers)
- NEP-INT-2009-11-07 (International Trade)
- NEP-MIG-2009-11-07 (Economics of Human Migration)
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.:
- Florian Heiss & Alexander Ludwig & Joachim Winter, 2002.
"Pension reform, capital markets, and the rate of return,"
MEA discussion paper series
02023, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
- Axel Boersch-Supan & Florian Heiss & Alexander Ludwig & Joachim Winter, 2003. "Pension Reform, Capital Markets and the Rate of Return," German Economic Review, Verein für Socialpolitik, vol. 4(2), pages 151-181, 05.
- Börsch-Supan, Axel & Heiß, Florian & Winter, Joachim, 2000. "Pension reform, capital markets, and the rate of return," Discussion Papers 589, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
- Lena Calahorrano, 2011. "Population Aging and Individual Attitudes toward Immigration: Disentangling Age, Cohort and Time Effects," SOEPpapers on Multidisciplinary Panel Data Research 389, DIW Berlin, The German Socio-Economic Panel (SOEP).
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