Two-way Migration Between Similar Countries
AbstractWe develop a model to explain two-way migration of high-skilled individuals between countries that are similar in their economic characteristics. High-skilled migration is explained by a combination of two features: In both countries workers’ abilities are private knowledge, and the production technology gives incentives to firms for hiring workers of similar ability. In the presence on migration cost, high-skilled workers self-select into the group of migrants, thereby ensuring they are hired together with other high-skilled migrants. The laissez-faire equilibrium features too much migration, explained by a negative migration externality, and as a result all individuals are worse off than in autarky. We also show that for sufficiently low levels of migration cost the optimal level of migration is strictly positive. In extensions to our basic model, we consider the presence of an internationally immobile factor and find that in this case the possibility of aggregate gains from migration in the laissez-faire equilibrium emerges. We also show that our basic results are robust with respect to small differences in countries’ technologies.
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Bibliographic InfoPaper provided by University of Nottingham, GEP in its series Discussion Papers with number 11/07.
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Migration; Skilled Workers; Positive Assortative Matching; Externalities;
Other versions of this item:
- Kreickemeier, Udo & Wrona, Jens, 2011. "Two-way migration between similar countries," University of Tuebingen Working Papers in Economics and Finance 1, University of Tuebingen, Faculty of Economics and Social Sciences.
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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