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Factor Mobility and Income Growth: Two Convergence Hypotheses

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  • Assaf Razin
  • Chi-Wa Yuen

Abstract

While technologies and policy fundamentals are presumably different internationally, inducing differences in growth rates, capital mobility is shown to be a powerful force in achieving complete growth rate equalization across countries. We provide evidence in support of this effect, showing that restrictions on capital flows tend to make individual country growth rates more divergent. In the context of regional growth, however, labor mobility is shown to be capable of generating income level equalization across regions in the presence of knowledge spillovers. Some supporting evidence is found for this effect, showing that restrictions on labor flows tend to make individual region/country per capita income more divergent.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5135.

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Date of creation: May 1995
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Publication status: published as Review of Development Economics, vol.1, no.1, March 1997.
Handle: RePEc:nbr:nberwo:5135

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Cited by:
  1. Nils Björksten, 2000. "Economic Catching up in the Enlarged Euro Area: Implications for the Common Monetary Policy," EUI-RSCAS Working Papers 52, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
  2. Nikolay Nenovsky & Kalina Dimitrova, 2002. "Dual Inflation Under the Currency Board: The Challenges of Bulgarian EU Accession," William Davidson Institute Working Papers Series 487, William Davidson Institute at the University of Michigan.
  3. Rehme, Gunther, 2006. "Redistribution and economic growth in integrated economies," Journal of Macroeconomics, Elsevier, vol. 28(2), pages 392-408, June.
  4. Nigar Hashimzade & Gareth D. Myles, 2009. "Growth and Public Infrastructure," Economics & Management Discussion Papers em-dp2009-03, Henley Business School, Reading University.
  5. Assaf Razin & Chi-Wa Yuen, 1999. "Optimal International Taxation and Growth Rate Convergence: Tax Competition vs. Coordination," International Tax and Public Finance, Springer, vol. 6(1), pages 61-78, February.
  6. Zsolt Becsi, 1996. "Do state and local taxes affect relative state growth?," Economic Review, Federal Reserve Bank of Atlanta, issue Mar, pages 18-36.
  7. Jinghua Zhang & Fangwei Wu & Deyuan Zhang & Yongmin Wang, 2009. "A study on labor mobility and human capital spillover," China Agricultural Economic Review, Emerald Group Publishing, vol. 1(3), pages 342-356, September.

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