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International Factor Mobility, Skills Formation and Welfare

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Author Info
Chaudhuri, Sarbajit

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Abstract

The paper examines the welfare consequences of an inflow of foreign capital and an emigration of skilled labour in a small open economy in terms of a four sector general equilibrium model in the presence of endogenous skill formation and imperfection in the market for unskilled labour. It finds that both foreign capital and emigration of skilled labour may be welfare-improving although the outcomes of these policies depend on the relative capital intensities of different sectors and the magnitude of imperfection in the market for unskilled labour. Measures like labour market reform and capital subsidy (or tax) to the appropriate sector may be resorted to improve national welfare and ensure higher skills formation.

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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9302.

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Date of creation: 18 May 2008
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Handle: RePEc:pra:mprapa:9302

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Related research
Keywords: Foreign capital; Skills formation; Labour market imperfection; National welfare; Labour market reform;

Find related papers by JEL classification:
F11 - International Economics - - Trade - - - Neoclassical Models of Trade

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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  1. Feenstra, R.C. & Hanson, G.H., 1995. "Foreign Investment, Outsourcing and Relative Wages," Department of Economics 95-14, California Davis - Department of Economics.
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  2. Bhagwati, Jagdish & Rodriguez, Carlos, 1975. "Welfare-theoretical analyses of the brain drain," Journal of Development Economics, Elsevier, vol. 2(3), pages 195-221, September. [Downloadable!] (restricted)
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  3. Marjit, Sugata & Beladi, Hamid, 1996. "Protection and the gainful effects of foreign capital," Economics Letters, Elsevier, vol. 53(3), pages 311-316, December. [Downloadable!] (restricted)
  4. Kar, Saibal & Beladi, Hamid, 2004. "Skill formation and international migration: welfare perspective of developing countries," Japan and the World Economy, Elsevier, vol. 16(1), pages 35-54, January. [Downloadable!] (restricted)
  5. Sarbajit Chaudhuri, 2005. "Labour Market Distortion, Technology Transfer And Gainful Effects Of Foreign Capital," Manchester School, University of Manchester, vol. 73(2), pages 214-227, 03. [Downloadable!] (restricted)
  6. Sugata Marjit & Hamid Beladi & Avik Chakrabarti, 2004. "Trade and Wage Inequality in Developing Countries," Economic Inquiry, Oxford University Press, vol. 42(2), pages 295-303, April. [Downloadable!] (restricted)
  7. Chaudhuri, Sarbajit, 2007. "Foreign capital, welfare and urban unemployment in the presence of agricultural dualism," Japan and the World Economy, Elsevier, vol. 19(2), pages 149-165, March. [Downloadable!] (restricted)
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  8. Rivera-Batiz, Francisco L., 1982. "International migration, non-traded goods and economic welfare in the source country," Journal of Development Economics, Elsevier, vol. 11(1), pages 81-90, August. [Downloadable!] (restricted)
  9. Quibria, M. G., 1988. "A note on international migration, non-traded goods and economic welfare in the source country," Journal of Development Economics, Elsevier, vol. 28(3), pages 377-387, May. [Downloadable!] (restricted)
  10. Rodriguez, Carlos Alfredo, 1975. "On the Welfare Aspects of International Migration," Journal of Political Economy, University of Chicago Press, vol. 83(5), pages 1065-72, October. [Downloadable!] (restricted)
  11. Marjit, Sugata & Kar, Saibal, 2005. "Emigration and wage inequality," Economics Letters, Elsevier, vol. 88(1), pages 141-145, July. [Downloadable!] (restricted)
  12. Chaudhuri, Sarbajit & Yabuuchi, Shigemi, 2007. "Economic liberalization and wage inequality in the presence of labour market imperfection," International Review of Economics & Finance, Elsevier, vol. 16(4), pages 592-603. [Downloadable!] (restricted)
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  13. Chandra, Vandana & Khan, M Ali, 1993. "Foreign Investment in the Presence of an Informal Sector," Economica, London School of Economics and Political Science, vol. 60(237), pages 79-103, February. [Downloadable!] (restricted)
  14. Grinols, Earl L, 1991. "Unemployment and Foreign Capital: The Relative Opportunity Costs of Domestic Labour and Welfare," Economica, London School of Economics and Political Science, vol. 58(229), pages 107-21, February. [Downloadable!] (restricted)
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