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Immigration and Economic Growth: Do Origin and Destination Matter?

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  • Kang, Youngho
  • Kim, Byung-Yeon

Abstract

This paper assesses the heterogeneous effects of immigration on economic growth depending on both the origin and the destination countries. Following the development of a simple growth model augmented by the embodied human capital of immigrants, we estimate the growth equation using a gravity-style instrument variable approach and the dynamic system-GMM estimator. We find that immigration from developed economies positively affects the economic growth of the host countries. Furthermore, the growth-enhancing effect of immigration is significantly larger when immigration flows from developed to developing economies than when it does to those that include both developed and developing economies. We interpret these results as evidence of immigrants from developed countries bringing with them – upon entry – their advanced knowledge on technology and institutions into the developing countries that host them.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39695.

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Date of creation: 27 Jun 2012
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Handle: RePEc:pra:mprapa:39695

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Keywords: International migration; Economic Growth;

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  1. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  2. Berthélemy, Jean-Claude & Beuran, Monica & Maurel, Mathilde, 2009. "Aid and Migration: Substitutes or Complements?," World Development, Elsevier, vol. 37(10), pages 1589-1599, October.
  3. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  4. Giovanni Prarolo & Elena Bellini & Gianmarco I.P. Ottaviano & Dino Pinelli, 2009. "Cultural Diversity and Economic Performance: Evidence from European Regions," Working Papers 2009.63, Fondazione Eni Enrico Mattei.
  5. Bowsher, Clive G., 2002. "On testing overidentifying restrictions in dynamic panel data models," Economics Letters, Elsevier, vol. 77(2), pages 211-220, October.
  6. Gianluca OREFICE, 2010. "Skilled Migration and Economic Performances: evidence from OECD countries," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2010015, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  7. Francesc Ortega & Giovanni Peri, 2009. "The Causes and Effects of International Migrations: Evidence from OECD Countries 1980-2005," Working Papers 96, University of California, Davis, Department of Economics.
  8. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
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