Two facts motivate this study. (1) The United States is the world's most productive economy. (2) The US is the destination for a broad range of net factor inflows: unskilled labor, skilled labor, and capital. Indeed, these two facts may be strongly related: All factors seek to enter the US because of the US technological superiority. The literature on international factor flows rarely links these two phenomena, instead considering one-at-a-time analyses that stress issues of relative factor abundance. This is unfortunate, since the welfare calculations differ markedly. In a simple Ricardian framework, a country that experiences immigration of factors motivated by technological differences always loses from this migration relative to a free trade baseline, while the other country gains. We provide simple calculations suggesting that the magnitude of the losses for US natives may be quite large $72 billion dollars per year or 0.8 percent of GDP.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
8971.
Length: Date of creation: May 2002 Date of revision: Handle: RePEc:nbr:nberwo:8971
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Find related papers by JEL classification: F2 - International Economics - - International Factor Movements and International Business J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
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Robert E. Hall & Charles I. Jones, 1996.
"The Productivity of Nations,"
NBER Working Papers
5812, National Bureau of Economic Research, Inc.
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