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Migration and trade: Theory with an Application to the Eastern- Western European Integration

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  • Iranzo, Susana
  • Peri, Giovanni

Abstract

The remarkable increase in trade flows and in migratory flows of highly educated people are two important features of globalization of the last decades. This paper extends a two-country model of inter- and intraindustry trade to a rich environment featuring technological differences, skill differences and the possibility of international labor mobility. The model is used to explain the patterns of trade and migration as countries remove barriers to trade and to labor mobility. We parameterize the model to match the features of the Western and Eastern European members of the EU and analyze first the effects of the trade liberalization which occured between 1989 and 2004, and then the gains and losses from migration which are expected to occur if legal barriers to labor mobility are substantially reduced. The lower barriers to migration would result in significant migration of skilled workers from Eastern European countries. Interestingly, this would not only benefit the migrants and most Western European workers but, via trade, it would also benefit the workers remaining in Eastern Europe. Key Words: Skilled Migration, Gains from Variety, Real Wages, Eastern-Western Europe. JEL Codes: F12, F22, J61.

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Bibliographic Info

Paper provided by Universitat Rovira i Virgili, Department of Economics in its series Working Papers with number 2072/42865.

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Date of creation: 2009
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Handle: RePEc:urv:wpaper:2072/42865

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Keywords: Competència econòmica imperfecta; Emigració i immigració; Immigrants -- Treball; Mobilitat laboral; 331 - Treball. Relacions laborals. Ocupació. Organització del treball;

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Citations

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Cited by:
  1. David de la Croix & Frederic Docquier, 2010. "Do Brain Drain and Poverty Result from Coordination Failures?," CReAM Discussion Paper Series 1009, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  2. Karin Mayr & Giovanni Peri, 2009. "Brain Drain and Brain Return: Theory and Application to Eastern-Western Europe," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 49.
  3. Frederic Docquier & Elisabetta Lodigiani & Hillel Rapoport & Maurice Schiff, 2011. "Emigration and democracy," CReAM Discussion Paper Series 1102, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  4. Francesc Ortega & Giovanni Peri, 2012. "The Role of Income and Immigration Policies in Attracting International Migrants," Working Papers 1214, University of California, Davis, Department of Economics.
  5. Giovanni Peri, 2011. "The Impact of Immigration on Native Poverty through Labor Market Competition," NBER Working Papers 17570, National Bureau of Economic Research, Inc.
  6. Valentina Bosetti & Cristina Cattaneo & Elena Verdolini, 2012. "Migration, Cultural Diversity and Innovation: A European Perspective," Working Papers 2012.69, Fondazione Eni Enrico Mattei.
  7. Spiros Bougheas & Doug Nelson, . "Skilled Worker Migration and Trade: Inequality and Welfare," Discussion Papers 10/19, University of Nottingham, GEP.
  8. Frédéric Docquier & Çaǧlar Özden & Giovanni Peri, 2010. "The Wage Effects of Immigration and Emigration," NBER Working Papers 16646, National Bureau of Economic Research, Inc.

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