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Open Borders

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  • John Kennan

Abstract

There is a large body of evidence indicating that cross-country differences in income levels are associated with differences in productivity. If workers are much more productive in one country than in another, restrictions on immigration lead to large efficiency losses. The paper quantifies these losses, using a model in which efficiency differences are labor-augmenting, and free trade in product markets leads to factor price equalization, so that wages are equal across countries when measured in efficiency units of labor. The estimated gains from removing immigration restrictions are huge. Using a simple static model of migration costs, the estimated net gains from open borders are about the same as the gains from a growth miracle that more than doubles the income level in less-developed countries.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18307.

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Date of creation: Aug 2012
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Publication status: published as John Kennan, 2013. "Open Borders," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages L1-L13, April.
Handle: RePEc:nbr:nberwo:18307

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  1. John Kennan & James R. Walker, 2011. "The Effect of Expected Income on Individual Migration Decisions," Econometrica, Econometric Society, Econometric Society, vol. 79(1), pages 211-251, 01.
  2. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  3. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(6), pages 961-87, December.
  4. Douglas Gollin, 2001. "Getting Income Shares Right," Department of Economics Working Papers, Department of Economics, Williams College 2001-11, Department of Economics, Williams College.
  5. Francesco Caselli, 2007. "The Marginal Product of Capital," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 122(2), pages 535-568, 05.
  6. Hendricks, Lutz A., 2002. "How Important is Human Capital for Development? Evidence from Immigrant Earnings," Staff General Research Papers 11409, Iowa State University, Department of Economics.
  7. Storesletten, Kjetil, 1998. "Sustaining Fiscal Policy Through Immigration," Seminar Papers, Stockholm University, Institute for International Economic Studies 664, Stockholm University, Institute for International Economic Studies.
  8. Francesco Caselli, 2005. "Accounting for Cross-Country Income Differences," CEP Discussion Papers dp0667, Centre for Economic Performance, LSE.
  9. Ben S. Bernanke & Refet S. Gürkaynak, 2002. "Is Growth Exogenous? Taking Mankiw, Romer, and Weil Seriously," NBER Chapters, in: NBER Macroeconomics Annual 2001, Volume 16, pages 11-72 National Bureau of Economic Research, Inc.
  10. Richard B. Freeman, 2006. "People Flows in Globalization," NBER Working Papers 12315, National Bureau of Economic Research, Inc.
  11. Todd Schoellman, 2012. "Education Quality and Development Accounting," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 388-417.
  12. Klein, Paul & Ventura, Gustavo, 2009. "Productivity differences and the dynamic effects of labor movements," Journal of Monetary Economics, Elsevier, Elsevier, vol. 56(8), pages 1059-1073, November.
  13. Michael A. Clemens, 2011. "Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 25(3), pages 83-106, Summer.
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Cited by:
  1. Marco Delogu & Frédéric Docquier & Joël Machado, 2014. "The Dynamic Implications of Liberalizing Global Migration," CESifo Working Paper Series 4596, CESifo Group Munich.
  2. Zimmermann, Klaus F., 2013. "The Mobility Challenge for Growth and Integration in Europe," IZA Policy Papers, Institute for the Study of Labor (IZA) 69, Institute for the Study of Labor (IZA).
  3. Biavaschi, Costanza & Elsner, Benjamin, 2013. "Let's Be Selective about Migrant Self-Selection," IZA Discussion Papers 7865, Institute for the Study of Labor (IZA).
  4. Zimmermann, Klaus F., 2013. "Reflexionen zur Zukunft der Arbeit," IZA Standpunkte, Institute for the Study of Labor (IZA) 56, Institute for the Study of Labor (IZA).

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